Elmera Group ASA

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M&A 44 328 47 182 Volume sold (GWh) 17 506 20 193 # of deliveries ('000) excl. Extended Alliance 954 975 Electricity price (Nord Pool System price) y= NOK/MWh 282,05 269,06 287,16 317,90 505,72 369,24 475,08 2330,56 Key ﬁgures 934,04 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018 Jan 2019 Jan 2020 Jan 2021 Jan 2022 Jan 2022 Des 500 1000 1500 2000 2500 0 1.1 Letter from the CEO Part 1 Part 1 – 1.1 Letter from the CEO Annual report 2022 4 Annual report 2022 5 Part 1 – 1.1 Letter from the CEO Letter from the CEO 2022 was characterised by war in Europe, cri- sis in the energy markets, increasing inﬂation rates and rising interest rates. This presented major challenges at all levels and from all per- spectives: human, economic and societal – and also for the green transition. At the time of writing, the price pressure in the gas and electricity markets has decreased signiﬁcantly from the extreme levels in 2022. Both spot prices and electricity prices in the futures market have fallen, but there is a need for supply-side measures to increase the supply of renewable energy, while customers require greater predictability. The authorities’ temporary measures must be followed up as soon as possible by permanent, forward-look- ing measures. An Energy Commission set up by the Norwegian government submitted its re- commendations in February this year. The Commission proposes to increase power supply by 60 TWh by 2030. This corre- sponds to an increase of 40 per cent com- pared to Norway’s power production in 2022. According to Statnett (the system operator of the Norwegian power system), Norway might risk a power deﬁcit as early as 2027 unless there is rapid expansion with signiﬁcantly more power, while also investing in further incentives to reduce energy use. The Energy Commission will be followed up by an “Electricity Pricing Committee” that will work until October 2023. The committee will present perspectives and discuss the challenges presented by the current model for determining power prices, as the power systems in our neighbouring counties achieve a very high production ratio for renewables. It must be considered how to incentivise the development of new renewable energy, while also shielding consumers and businesses from the greatest price ﬂuctuations. The Norwegian government has decided to shield Norwegian households from extraor- dinarily high prices by continuing its price support model to the end of 2024. Business customers are incentivised by adjusted tax terms for producers that stimulate improved ﬁxed-price models. So far, the impact on the business market has been limited. We have taken an active role vis-à-vis indus- try associations and authorities, since elec- tricity and the industry are receiving a lot of attention. In our dialogue with the authorities and professional communities, we contribute broad expertise based on insights from the business market and the consumer market in Norway, Sweden and Finland. We also share our experience and input on further market development and market regulation. Rolf Barmen, CEO at Fjordkraft. Photo: Frode Fjellstad Our stance in the political debate is that, despite its volatility, the power market func- tions according to normal market principles, where supply and demand regulate the con- sumption of electricity, as a ﬁnite commodity, in a good way. Elmera Group is well-positioned to oﬀer products and services to other energy com- panies and to end-customers in a market that will require more renewable energy, more eﬃ- cient energy utilisation and the possibility of reducing risk and equalising costs. From companies to a Group This year we developed and strengthened our Group structure, based on our mission statement: We will create the most attractive electricity retailers in the Nordics – where we balance consideration of the four perspec- tives: customers, employees, investors and society. This is the Group’s overarching mis- sion. All our companies and business areas must contribute to this. The Group thus provides electricity, billing and rating services and electricity-related technology solutions to consumers, busi- nesses and the wholesale market. Elmera’s electricity suppliers have Norway’s largest customer base, supported by strong B2C brands and a B2B segment providing tai- lor-made solutions to businesses of all sizes. The reputations of producers, power grid companies and end-user companies have taken a hit in recent years. We are pleased Annual report 2022 6 Part 1 – 1.1 Letter from the CEO Rolf Barmen , CEO that last autumn one of our end-user com- panies, Gudbrandsdal Energi, regained the number 1 position when it comes to customer satisfaction, after being number 2 in 2021. Our largest end-user company, Fjordkraft, is also on a positive customer satisfaction trend and is top-of-mind in the industry. Focus areas In the coming year, cost eﬃciency and new net revenue streams are our focus areas to mitigate margin contractions, particularly in the consumer segment. We have and will continue to revise and renew our product strategy in the consumer segment. This means reducing complexity and continuing the soft phase-out of “variable” products, to increase transparency. In 2023 we will introduce attractive new services to strengthen the Group’s value propositions. The Business segment in Norway is per- forming well. We will increase penetration in the Business and Nordic segments and have already started to replicate our successful Norwegian model in Sweden and Finland. Furthermore, we will continue to seek growth opportunities through Nordic expansion, as the Nordic markets converge. Our strategy is to continue to pursue M&A opportunities, seeking accretive acquisitions, but we will also focus on organic growth in the Nordics in order to optimise capital allocation. Improving cost efﬁciency As stated in the Q4 presentation in February this year, we have initiated a NOK 100 mil- lion cost reduction programme. This includes continuously improving the scalability of our technical and operating platforms. Nordic The Group’s experience from the Norwegian market will be used to roll out proven con- sumer concepts and solutions in Sweden and Finland. As from March, Nordic Green Energy Finland is launching a new app for consum- ers, based on our Norwegian app. The app aims to help customers manage their elec- tricity consumption and costs, and thereby position the Nordic Green Energy brand as an attractive supplier in the Finnish market. NGI The market conditions also provide positive support for the Group’s New Growth Initiatives, and we are committed to strengthening the contribution from the NGI segment. When it comes to our mobile services, we look forward to capitalising on our new coop- eration with Telia. We see this as beneﬁcial for our customers, as well as for the proﬁtability of the business area. The transaction will be ﬁnalised in Q1 2023. The business plan of Steddi Payments (for- merly Betalservice AS) involves expanding payment solutions to multiple retailers. End- users need to be able to spread the bill for electricity costs throughout the year. For the supplier, the value proposition is improved working capital, reduced interest costs, reduced churn and increased customer sat- isfaction. AllRate – our billing and rating company oﬀering services to our Alliance partners – has also introduced rating and billing services for grid companies. This is currently an unserved segment, and we look forward to seeing how this market develops in the next few years. Metzum, our software company (40% own- ership), is increasing its recurring revenue outside Elmera Group, and is well-positioned to take further market shares in both the retail and grid segments. Solar panels and leasing solutions The Group is strengthening its involvement in solar, oﬀering solar panel installations and assisting our customers with the produc- tion, storage and sale of solar energy. In February this year, the Norwegian authorities announced that they would facilitate more solar production by housing associations and commercial buildings by allowing them to send up to 1 MW of electricity into the grid with exemption from grid tariﬀs and electricity tax. The future Elmera Group is a frontrunner in accelerating the green transition for over 1 million custom- ers in the Nordic region. We promote using our apps in order to save power and increase predictability. Our ongo- ing “Klimanjaro initiative” contributes to cut- ting emissions in cooperation with suppliers and customers. With revenue streams from several brands, segments and countries, Elmera Group is well-positioned to become a leading player in the Nordic electricity market. 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. Attractive to custom- ers, employees, investors and society. 2.1 Elmera Group at a glance Part 2 Part 2 – 2.1 Elmera Group at a glance 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%) Company Structure: Our business Annual report 2022 8 Elmera Group 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 provides consumers, businesses and the wholesale market with electricity, billing and rating services and electricity related technology solutions. MISSION To create the most attractive electricity retailers in the Nordics VISION Provide 3 million people with electricity services VALUES Simplify - Be friendly - Create value Annual report 2022 9 Elmera Group ASA uses the following segments in its ﬁnancial reporting: • Consumer, Norway • Business, Norway • Nordic, electricity sales business in Switch Nordic Green, Sweden and Finland • New Growth Initiatives (NGI), which con- sists of the mobile services business, the alliance segment, the Extended Alliance, AllRate AS Consumer market, Norway The Group has several brands, Fjordkraft, TrøndelagKraft, Gudbrandsdal Energi and in total the Group accounted for a total of 685,000 electricity deliveries at the end of 2022 in the Norwegian consumer segment. Its overall market share in the consumer segment in Norway is approximately 27 per cent. Business market, Norway Fjordkraft is a leading supplier to the business market and accounted for a total of 120,000 deliveries in the Norwegian business market. Products range from straightforward electricity contracts to advanced power portfolio man- agement. 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. Fjordkraft 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 con- sumer and business markets under the brand name Nordic Green Energy. At the end of the year, Switch Nordic Green had a combined total of 149,000 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 144,000 mobile subscribers at the end of 2022. 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. The transaction is expected to be completed in Q1 of 2023, and the customer migration will take place in Q2 2023. Fjordkraft AS’ mobile business will be demerged to “Fjordkraft Mobil AS”, a new limited liability company to be incorporated in Norway, and Telia will purchase 39% of the shares in Fjordkraft Mobil AS. Extended Alliance Elmera Group delivers billing and payment services for electricity and broadband to 20 companies via its Moment platform. The platform was developed by Fjordkraft and is operated and upgraded by its jointly owned software. 35 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 35 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 situations for a wide range of diﬀerent players and allows us to present a compre- hensive picture in our communication with industry associations and the government. Part 2 – 2.1 Elmera Group at a glance Our business Numbers in thousands Full year 2022 Full year 2021 Electrical deliveries Consumer segment 685 692 Electrical deliveries Business segment 120 111 Electrical deliveries Nordic segment 149 171 Total number of electrical deliveries 954 975 Number of mobile subscriptions 144 160 Deliveries * Number of deliveries excl. Extended Alliance deliveries. Number of deliveries incl. Extended Alliance deliveries: 1 033 thousand in Q4 2022. Annual report 2022 10 Our business Part 2 – 2.1 Elmera Group at a glance Acquisitions • On 1 July 2019, Fjordkraft acquired 100 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. • Sky mobile. Portfolio of approximately 34,000 mobile clients were acquired in October 2021. 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 Industrail 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 prop- osition. In 2023 Steddi Payments expects to launch several news in the market, aimed at reducing the frictions and neg- ative surprises. Joint ventures Fjordkraft’s in-house billing and management system, the Fjordkraft platform, has been upgraded to sell billing and payment services to other alliance partners. 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. Ownership structure Fjordkraft was founded in 2001, following the merger of BKK’s and Skagerak Energi’s enduser customer portfolios. Through the IPO of Fjordkraft in 2018, both parties reduced their holdings, and during 2020 both BKK and Skagerak Energi reduced their holdings. Skagerak Energi sold all their remaining shares in May 2020, while BKK sold all their remaining shares in January 2021. Through the acquisition of Innlandskraft in 2020, Gudbrandsdal Energi Holding became 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 Annual report 2022 11 a signiﬁcant owner, holding about 6.7% of the total shares outstanding as per year-end 2022. The Government Pension Fund Norway was the largest shareholder as per year-end 2022, holding 8.7% 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, customer-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. Klimanjaro and www.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. In 2021, a production record for electrical power was set in Norway, with a total of 157 TWh produced. In 2022, production totalled 146 TWh. The decline from the record year was around 8 per cent. Less snow in the mountains and less precipita- tion contributed to lower reservoir levels in the southern part of Norway, with reduced production as a result. Hydroelectric power accounted for 87.5 per cent of total domestic power gener- ation in 2022. Wind power production in Norway increased in 2022 to 14.8 TWh, up from 12 TWh in 2021, and accounted for 10 per cent of production. The remain- ing 2.5 per cent is power generation in thermal power plants linked to industry that exploit municipal waste, industrial waste, surplus heat, oil, natural gas and coal. The total consumption of electricity in Norway in 2022 amounted to 134 TWh. In overall terms, this is a decrease of 4 per cent compared to 2021, when a new record was set for electricity consumption in Norway. Consumption totalled 138.9 TWh in 2021. Total consumption by Norwegian house- holds was 35 TWh in 2022, which is the low- est level since 2014, according to ﬁgures from Elhub. Norwegian households reduced their consumption by around 13.1 per cent in total in 2022, compared to 2021. Variation in outdoor temperature is normally the fac- tor with the greatest impact on households’ consumption. The ﬁgures for 2022 show the greatest downturn in consumption in the regions with the highest area prices in the power market. In Central and Northern Norway, households cut consumption by 4.5 per cent, while for the three southern Norwegian price areas (NO1, NO2 and NO5) power consumption in 2022 was reduced by 16.4 per cent compared to the previous year. Part 2 – 2.1 Elmera Group at a glance Our business Power production and electricity consumption in Norway in 2022 Trough Klimanjaro, the company used its purchasing power and set climate neutrality as a requirement for those who wished to supply 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 car- bon oﬀsets. Additionally, companies with approved science-based targets in line with the Science Based Targets initiative are also considered climate committed and accepted as a supplier. In 2020 we launched the web portal Klimahub. Klimahub is a portal where users can check Norwegian companies’ climate footprints, produce corporate cli- mate accounts and invite partners to do the same. In 2022 we expanded Klimahub with a partner; TOBB. We aim to formalise more partnerships in 2023. 2.2 Management Part 2 – 2.2 Management Annual report 2022 12 Annual report 2022 13 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 and also became the chairman of Trondheim Kraft AS at that time. He has extensive experience as a chief executive oﬃcer within the telecommunication indus- try 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). 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, Kraftallianse, Steddi Payments Chief Executive Ofﬁcer (CEO) Rolf Barmen CEO Gudbrandsdal Energi AS Marius Sveipe CEO Fjordkraft AS Magnar Øyhovden Chief Financial Ofﬁcer (CFO) Henning Nordgulen Chief Operational Ofﬁcer (COO) Solfrid Fluge Andersen Executive Vice- President Business Roger Finnanger Annual report 2022 14 Arnstein Flaskerud Executive Vice-President (EVP) and Head of Strategy and M&A Background: Arnstein Flaskerud, born in 1963, is the Company’s Executive Vice- President (EVP) and Head of Strategy and Mergers and Acquisitions. 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). 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. Annual report 2022 15 Marius Røed Sveipe Chief Executive Ofﬁcer, Gudbrandsdal Energi AS Background: Marius Røed Sveipe, born in 1981, is the Chief Executive Oﬃcer of Gudbrandsdal Energi AS. Mr. Sveipe started his own company within software development at the age of 16. He has experience from Kongsberg Seatex within electronics design and embedded software. He also has experience as an engineer within subsea control systems from Equinor, where he was subsea control lead on the Gullfaks Subsea Compression project. Mr. Sveipe started with Gudbrandsdal Energi AS in 2018 and has been the company’s CEO since 2019. Education: Mr. Sveipe is a civil engineer and holds a Master of Science in Communications Technology from NTNU. Part 2 – 2.2 Management 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 2022 16 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). Solfrid Fluge Andersen Executive Vice-President (EVP) and Head of Operations (COO) 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. Ms Andersen also has relevant experience 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. Part 2 – 2.2 Management Annual report 2022 17 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). 2.3 ESG-report Environment - Social - Governance Part 2 – 2.3 ESG-report Annual report 2022 18 About the report Elmera Group has reported in accordance with the GRI Standards for the period 1.1.2022 – 31.12.2022. These are internationally recognised standards for reporting on environmental, social and economic issues. In accordance with the GRI standards, we conducted a stakeholder anal- ysis and materiality assessment to identify which sustainability themes are the most central to us and our stakeholders. This is described in the chapter entitled: The right balance. The GRI-index, published at the end of this report, provides a reference to where reported information for every GRI indicator can be found. We believe that the reporting is in accordance with the GRI reporting principles and the Norwegian Accounting Act’s requirement to report on corporate social responsibility. All subsidiaries where Elmera Group holds a majority interest are included in the report. Information have been gathered from relevant resources in each company and are 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 by Deloitte. The auditor’s statements can be found on page 55. THE RIGHT BALANCE 19 ENVIRONMENT 22 Elmera Group’s climate pledge 23 UN Sustainable Development Goals 24 Power generation from local solar energy 25 Internal climate and environmental measures 26 Climate Accounts 2022 28 Climate risk 29 Task Force on Climate-Related Financial Disclosure (TCFD) report 32 Products and services for the low-emission society 34 SOCIAL 37 Our people 38 Business partners and certiﬁcations 42 GOVERNANCE 43 Responsible procurement 44 Attractive reputation 46 GRI - INDEX 48 AUDITOR’S REPORT 55 Annual report 2022 19 The right balance THE DIAMOND MODEL Attractive to owners Attractive to employees Attractive to customers Attractive to society process, including identifying, assessing, and prioritizing Elmera Group’s actual and poten- tial impacts on environment, people and econ- omy. The Executive Management Group have overseen the process and provided valuable insights. Material topics have been presented to the Board of Directors and approved. Stakeholder views were collected through interviews with employees in the organization who have direct contact with a stakeholder group. For instance, to cover topics signif- icant to the investors, the Head of Investor Relations were interviewed. In addition to the investors, we have identiﬁed customers, employees, suppliers, and relevant authorities as our most important stakeholders. We con- tinuously engage with stakeholders through various channels like customer service and employee surveys. Stakeholder engagements is integral to how we run our business, as it enables us to make informed decisions. Based on our organizational context, and informed by the stakeholder analysis, we listed actual and potential impacts, both pos- itive and negative, within each dimension of ESG. These were then prioritized based on signiﬁcance. Criteria to judge signiﬁcance for negative impacts were severity, scale and scope, and likelihood. Similarly, positive impacts were prioritized based on scale and 2022 was a year of turmoil, both in the world and in our industry. High and unpredictable electricity prices attracted a lot of attention. As our customers have become more aware of their own electricity consumption, we are helping them transition to the renewable soci- ety – a society where customers look for sus- tainable solutions. As a Group, we must be attractive to soci- ety, owners, customers and our employ- ees. Negative media attention in 2022 had an impact on our stakeholder group. More people than before have switched electricity retailers. We have experienced losing custom- ers and also gaining many new ones. To ﬁnd the right balance in our work, and concentrate our actions and reporting on the most material topics we have conducted a materiality assessment in accordance with the GRI Standards. The process builds upon insights acquired through due diligence activities carried out in compliance with Norway’s Transparency Act and stakeholder analysis. Resources from every function with executive responsibilities for ESG have been involved in all steps of the Part 2 – 2.3 ESG-report scope and likelihood. Impacts where we can make the most signiﬁcant diﬀerences were weighted. The impacts were grouped in three levels based on signiﬁcance for Elmera Group and our stakeholders. The results are presented in the table below. Topics deemed the most material are located in the right-hand column. Annual report 2022 20 Part 2 – 2.3 ESG-report Annual report 2022 21 In brief about the most signiﬁcant topics we will work on in the future: Attractive reputation: Reputation is in many ways the reﬂection of our actions. How we are perceived by the cus- tomers, investors, employees, and authorities is integral to our ability to deliver on strategic goals, and thus, our impact on environmental, social and economic conditions. Its funda- mental importance is why it is classiﬁed as one of our most material topics. Read more about this under Governance. GRI-indicators: 417-1, 417-2, 417-3, 418-1. GRI-indicators reported for responsible procurement and the right skills are also relevant for this material topic. Goal: Customer satisfaction above 70 for all brands. Results from EPSI Norway’s annual customer satisfaction survey 2022: Consumer segment: Fjordkraft: 65,8 Gudbrandsdal Energi: 75 Business segment: Fjordkraft: 60,8 Responsible procurement: For many years, we have set various require- ments related to ESG for our ﬁxed suppliers. We use our clout in a positive way, as procure- ment focuses on both climate and the environ- ment, gender equality, diversity and inclusion, ethics and integrity, and human rights. The Norwegian Transparency Act helps us raise diﬀerent topics and investigate our supply chain in greater detail. GRI-indicators: 204-1, 205-1, 205-2, 205-3, 308-1, 308-2, 407-1, 408-1, 409-1, 414-1, 414-2. Goal: We pledge that our ﬁxed suppliers are climate committed. This is something we continuously monitor. In our latest thorough due diligence process, conducted in 2021, all regular suppliers were deemed compliant. Only a few minor incon- sistencies were pointed out and corrected. Power generation from local solar energy: 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 the renewable society. Power production from local solar energy is therefore one of our focus areas going forward. It ticks oﬀ 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. Goal: Number of customers with solar production to double annually. Base year is 2022 and development will be reported for the ﬁrst time in 2023. 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. Goal: Our brands are perceived as trustworthy and transparent by 50 per cent or more of our customers. Measured quarterly (annually for NGE) through the brandtracker, and scored as the mean of the three selected pillars. Each brand is weighted according to customer base. Results Q4: Fjordkraft: 50 %, an increase of 14 percentage points since Q3. Gudbrandsdal Energi: 57 % Useful digital customer solutions: In 2022, we saw how important digital solu- tions are for customers. Our app is a good example. It provides useful information about consumption, price and energy footprint, and contributes to positive changes in our custom- ers’ consumption. Goal: 80 per cent of customers interact actively with our digital interfaces. An active user is deﬁned as someone who uses the app at least twice a month. Result at the end of 2022: Fjordkraft had close to 50 per cent active customers. Right competence – attract, retain and develop: We want to have the best employees in the Group. This makes it important to be an attractive employer that builds compe- tence internally and attracts the best people. Management competence is regarded as particularly important. GRI-indicators: 401-1, 401-2, 401-3, 404-1, 404-2, 404-3, 405-1, 405-2, 406-1 Goal: Human Capital Index above 25. Result 2022: 25,1. Part 2 – 2.3 ESG-report Large margins of error because of a small sample size. Annual report 2022 22 Environment Part 2 – 2.3 ESG-report Annual report 2022 23 Part 2 – 2.3 ESG-report In autumn 2022, we adjusted Elmera Group’s climate pledge, Klimanjaro. We pledge that our ﬁxed suppliers are climate committed. In the past, we have set the requirement of climate neutrality, but when the UN changed the Climate Neutral Now method, on which we relied, we also had to change our own requirement. We still want to set clear requirements for our suppliers. When we ask them to be climate committed, this means the following: Suppliers must prepare climate accounts and a list of measures to cut their emissions. These must be uploaded to the climate portal, Klimahub. They must also compensate for their emissions by purchasing allowances. We stand by the principle that the polluter should pay. Suppliers whose Science Based Targets (in accordance with SBTi) have been approved are also accepted as our suppliers. Why do we do this? We want to use our inﬂuence in a positive way. We have experienced that setting these requirements enables us to reduce green- house gas emissions by far more than it would be possible for us to do on our own. This is what we call the ripple eﬀect. Klimahub.no Elmera Group is not the climate police, but based on a wish of creating a national reg- ister for climate accounts which can be a driver for increased transparency, our ﬁxed suppliers are required to register climate accounts and measures to reduce emissions on Klimahub, our climate portal. By the end of 2022, 448 companies had registered their climate accounts on the portal. Klimahub is open to all businesses. Here, businesses can create climate accounts free of charge. If they already have climate accounts, a business can upload the total ﬁgures from Scope 1, 2 and 3 in order to register. The aim is for Klimahub to be the register we can use to monitor Norwegian companies’ climate footprint. On Klimahub, it is also possible to compensate for emissions by purchasing allowances. Business partners and suppliers can also be invited to post their ﬁgures on Klimahub. This helps to increase the transparency of climate accounts. Private individuals can use Klimahub to exert inﬂuence as consumers by choosing cli- mate-friendly companies for their purchases and as their potential employers. In 2022, we gained TOBB as a Klimahub partner. They use the climate portal to moti- vate all their members to create climate Elmera Group’s climate pledge The goals for ’Klimanjaro’ and Klimahub: 100 per cent of Elmera Group’s ﬁxed suppliers must be climate committed 100 per cent of Elmera Group’s ﬁxed 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 accounts and cut emissions. We are work- ing to bring more partners onto Klimahub. Collaboration with other players in diﬀerent sectors can make us stronger, and this will make Klimahub accelerate faster. At a meeting with employees, Mette Nygård Havre, head of sustainability in Elmera Group and Henrik Eliassen, business developer in Elmera Group, put forward a new climate pledge for the company. It was well received. Annual report 2022 24 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. In 2022, we pinpointed which of the UN Sustainable Development Goals Elmera Group can contribute towards the most. We chose four SDGs that are close to our business operations. Number 13: Climate Action This is the most important goal we are working towards achieving. By exerting our inﬂuence and making requirements of 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, each consumer must 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 must work hard to achieve these goals. If any of our busi- ness units want to work to achieve additional UN Sustainable Development Goals, they can do so, as long as they have a good reason. Annual report 2022 25 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 consumers and businesses, produce more of their own energy. Elmera Group has therefore set a new 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. 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 the renewable society. Power production from local solar energy is therefore one of our focus areas going for- ward. It ticks oﬀ all four of the UN Sustainable Development Goals that are most closely linked to our business strategy. By capitalis- ing on our large customer base, we have the opportunity to make a signiﬁcant contribution to more renewable energy. Annual report 2022 26 Part 2 – 2.3 ESG-report Internal climate and environmental measures Our ﬁxed suppliers are required to be climate committed, but what do we do internally in Elmera Group to reduce our own emissions? In 2022, we established an internal sustaina- bility group to consider various measures we can take in the climate, environmental and social areas. We are not a company with large emissions, but there are measures underway that we follow up in order to cut our own emis- sions. It is also important to get involved on a tangible basis and to make a diﬀerence. Here, we look at various opportunities going forward. Together with our climate accounts, we annually draw up a list of measures showing where we should reduce our own emissions. According to our 2019 climate accounts, our greatest emissions were from our travel activ- ities. We therefore set the goal to cut emis- sions related to air travel by 40 per cent per employee by the end of 2023. The zero point is based on 2019, which was the previous full “normal year”. A lot has happened since 2019, however. We have become Elmera Group, comprising several companies, but we are still focused on reducing emissions. 2022 began with the pandemic and restric- tions, but Norway opened up again quickly. This increased travel activity, but with the new learning that many meetings could be held online. We also have a separate travel policy with clear guidelines for employees. We are becoming a fossil-free company, but we are still waiting for our oﬃce prem- ises in Bergen to phase out the use of oil for heating. In 2022, we had the goal that 100 per cent of our used IT equipment would be reused or recycled. We have entered into an agreement with Atea and their 100 per cent club. The IT department held its own fundraiser at all our locations so that our employees could go though their drawers and cupboards at home to retrieve used mobile phones, PCs and tablets. They could bring these into work and leave them in collection cabinets. The IT department arranged handover to Atea, which in turn ensured reuse or recycling of the items. The IT department also ensured that used PCs in good condition from Elmera Group were delivered to a school in Fyllingsdalen in Bergen, which received refugees from Ukraine. Our staﬀ members went to the school to set up the PCs for the students. This was very well received by the refugees, while our employees greatly appreciated that they were able to contribute. 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 residual emissions by purchasing European Union Allowances (EUA). We are also working to motivate our own employees and customers to live more sustainably. We publish our climate accounts in Klimapartner Vestland’s annual emission report and on our own web portal, Klimahub. On the latter, our climate accounts and updated measures for further reductions can be viewed throughout the year. Klimahub is a register where you can check the climate footprint of Norwegian companies and use the information to make sustainable choices. Elmera Group is expanding both in Norway and in the Nordic region. This means that the Group’s total carbon footprint will increase in the years ahead. Our goal is to halve the carbon footprint per employee in the years to come, with the footprint from 2019 as the base year. Part 2 – 2.3 ESG-report Our IT department collected used PCs in good condition and delivered to refuges from Ukraine in Bergen. Photo: Frode Fjellstad Annual report 2022 27 Part 2 – 2.3 ESG-report Targets for greenhouse gas reductions: 100 per cent of Elmera Group’s ﬁxed suppliers must be climate committed. 100 per cent of Elmera Group’s suppliers must register on Klimahub.no. We will have 1,000 registered companies in Klimahub.no by the end of 2023. ENERGY 100 per cent of the electricity we use from the grid must be purchased with a guarantee of origin. TRANSPORT We have created a separate travel policy whereby employees must always assess whether travel is necessary from a climate and cost perspective. Our vehicle is fossil-free. We will cut emissions from air travel by 40 per cent per employee by the end of 2023 (base year 2019). WASTE 100 per cent of our used IT equipment must be reused or recycled. We set requirements for homeowners to sort waste at source. OTHER Our locations in Bergen, Trondheim and Sandefjord, as well as in Hamar and Kongsvinger, hold Eco-Light- house certiﬁcation We will start certiﬁcation of Sortland in 2023. At the Oslo and Stavanger oﬃces, there are so few employees that we will not undertake certiﬁcation in 2023. We use technology to streamline the communication between our locations. When purchasing goods, reuse must always be considered. Employees who walk, cycle or use public transport to travel to work receive ﬁnancial compensation. At the close of 2022, the compensation was increased from NOK 300 to NOK 500 per person. Employees can charge their electric cars at work. We undertake two beach clean-up days per year. All employees of Elmera Group must complete our digital sustainability school. All employees of Elmera Group must complete our internal sustainability certiﬁcation. Part 2 – 2.3 ESG-report A group of employees at beach cleaning with Bergen og Omland Friluftsråd (BOF). Photo: Frode Fjellstad Elmera Group’s residual emissions are compensated by the purchase of approved climate allowances For 2022, we purchased European Union Allowances (EUA) equivalent to our residual emissions. We also pur- chased CER (Certiﬁed Emission Reduction) allowances in line with our commitments as a participant in the UN’s Climate Neutral Now initiative. Elmera Group 2022 Fjordkraft 2019 Number of employees 440 Number of employees 293 Emissions from air travel per employee 0,53 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 2022 28 Part 2 – 2.3 ESG-report Climate Accounts 2022 Elmera Group ASA Elmera Group ASA Differanse CLIMATE ACCOUNTS (TONNES CO2E.) 2022 2021 2021-2022 Fuel (vehicles and other consumption) 1,9 1,7 Paraﬃn, propane and gas 8,8 13,0 Total direct emissions (Scope 1) 10,7 14,7 -27 % District heating/cooling 0 0 Electricity market-based 0 0 Total indirect emissions from purchased energy (Scope 2) 0 0 Flights 232,0 47,6 Mileage allowance 13,8 23,0 Other business travel 2,2 2,1 Employee travel to/from work 11,6 6,0 Purchased goods 3,6 0,0 Waste to recycling 0,2 1,1 Total other indirect emissions (Scope 3) 263,5 79,9 230 % Total emissions 274,2 94,6 190 % Total offsetting 274,2 94,6 KEY FIGURES Number of employees 440 479 -8 % Total energy consumption - MWh (fossil fuel + purchased energy) 851,9 946,6 -10 % Heated area (m2) 9074 9074 CLIMATE AND ENERGY DISCLOSURES Total emissions per employee excl. process emissions (tCO2e/employee) 0,6 0,2 215 % Energy consumption for heating premises (kWh/m2) 93,9 104,3 -10 % The signiﬁcant increase in emissions (133 tCO2e) from air travels is a result of better reporting. Part 2 – 2.3 ESG-report All our emissions are converted to CO2 equivalents through Klimahub which is built on the software solution GHG123, developed in compliance with the Greenhouse Gas Protocol. The solution utilizes emission conversion factors from DEFRA, DNV and IEA, among others, when calculating emissions. Our climate accounts included emissions from all companies in the group for the ﬁrst time in 2021. Thus, base year is set to 2021 for comparison. However, climate accounts prior to this, which includes only Fjordkraft, can be found in the annual report for 2021. Input to the climate accounts have been gathered from all our locations in Norway, Sweden and Finland. Annual report 2022 29 Part 2 – 2.3 ESG-report Assessment of climate risk is part of Elmera Group’s overall risk management and reporting. We make annual assessments, but no one could have foreseen the events of the past year in Europe. War, global climate challenges and the tran- sition to a low-emission society resulted in very high electricity prices in 2022. High electricity prices have led to a strong focus on our industry from the media, but also from our customers, who have become more price conscious. Many customers want to monitor electricity prices on a daily basis, and some even want to keep track in real time. Customers have become more aware of their own electricity consumption. This is essential in terms of fulﬁlling SDG 12, which states that we will have responsible consumption and production. In turn, as a Group we have been challenged to have even better technical solu- tions, for example in the various apps that our subsidiaries oﬀer to customers. In the future, we will make it easier for more of our customers to become self-suﬃcient by producing local electricity. We are therefore investing in more power production from local solar energy in 2023. There are opportunities for us as advisers to customers, but also as Climate risk an innovative company that can oﬀer services to help our customers transition to the renew- able society. Changes in customers’ consumption because of high electricity prices driven by factors such as increased gas prices caused by the Russian invasion of Ukraine, have a direct impact on us and our customers. This Part 2 – 2.3 ESG-report also applies to the EU’s climate goals and the phasing out of fossil energy production, as well as investment in renewable energy. The European power market has become increas- ingly weather-dependent, due to investment in solar- and wind power. This aﬀects the price of electricity. In the long term, more stable energy pro- duction is expected, which will probably lead to lower electricity prices. In a transitional phase, however, greater ﬂuctuations than nor- mal are expected. This will prevail for as long as there is war in Ukraine. Consumers have a low tolerance for high electricity prices, which entails risks for Elmera Group. Photo: Frode Fjellstad Annual report 2022 30 Part 2 – 2.3 ESG-report Climate risk Risk categorisation Risk assessment Conclusion Physical risk Physical risk is the 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 Transition risk is economic uncertainty associated with the transition to a low- emission society, and is divided into four categories: • Technology • Market • Policy • Reputation Power prices are aﬀected by the war in Ukraine and the transition to a low-emission society. The EU’s climate targets and the phasing-out of fossil energy production, as well as a focus on renewable energy with a signiﬁcant wind power element, have made the European power market increasingly dependent on prevailing weather conditions. In a transition phase, and for as long as the war continues, higher power prices and greater ﬂuctuations than normal are expected Challenges In 2022, there were signiﬁcantly higher power prices and greater ﬂuctuations than normal. After two years of very unstable prices, consumers have a low tolerance for high electricity prices. High prices draw more negative attention and increase the industry’s reputational challenges. In turn, this leads to more frequent supplier changes and greater uncertainty for us as an electricity supplier. Major ﬂuctuations in power prices make power purchases/hedging more demanding. Agreements based on price hedging are subject to greater risk. As a consequence of the high electricity prices, the risk of political intervention in the market increases. Opportunities The transition to a low-emission 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 high 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 systems. Medium risk Part 2 – 2.3 ESG-report Annual report 2022 31 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. It will also reduce pressure on the market and be beneﬁcial to the green transition if more people become self-suﬃcient in energy. We also intermediate sale of solar energy. This broadens our portfolio and can contribute to a positive reputation. Energy management tools provide new opportunities in the short term, but increasing energy eﬃciency presents a volume risk in the long term. The EU’s new classiﬁcation system, the Taxonomy, will come into force from 2023. Criteria are in place which reveal the signiﬁcance of hydroelectric power to the green transition. But hydroelectric power will also be subject to additional reporting requirements that do not apply to other renewable sources. 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 “Klimanjaro”, and “Klimahub”, Elmera Group is helping to raise awareness of greenhouse gas emissions and cutting emissions within and outside our own value chain. “Klimanjaro” is recognised by the UN as a practical, innovative and scalable climate measure that can be replicated all over the world. Elmera Group has assumed greater responsibility for stopping climate change than is expected of comparable companies. Low risk Part 2 – 2.3 ESG-report Climate risk Annual report 2022 32 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 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 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 2022 33 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 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, 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, which in 2022 was severely impacted by the Russian invasion of Ukraine, 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. 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 2022 34 Part 2 – 2.3 ESG-report Products and services for the low-emission society App In 2022, nearly 550,000 unique users started using an app provided by Elmera Group. Fjordkraft and Gudbrandsdal Energi each have their own apps for customers. At the start of 2022, the services in the Fjordkraft app were added to a new app for TrøndelagKraft, and in the Q3 to Q4 transition, ten alliance partners implemented the app. The apps provide customers with useful consumption and price information. In the apps, customers can see their electricity consumption in the previous month, so far this month, and estimated for the rest of the month. Customers can also view day-by-day consumption, and use a PULS meter to track hour-by-hour consumption. This overview ena- bles customers to more easily take control and reduce their electricity consumption – and save money. In 2022, it also became possible to view the electricity subsidy via the estimated cost for the current month. The apps have made it possible for more car brands to convert charged volumes into monetary amounts. In 2022, it also became possible to connect home chargers to the app. At Gudbrandsdal Energi alone, cus- tomers saved NOK 600,000 (including VAT) on smart charging throughout 2022. Many of our stakeholders have clearly stated that digital solutions are important to them. We have therefore decided that useful digital customer solutions are one of the most important things to work on in the future. Marketplace linked more closely to the app, and focus on the sale of physical products that reduce electricity consumption “Marketplace” is a digital shopping centre where Fjordkraft’s role is to interconnect cli- mate-neutral suppliers and customers. The products sold are closely linked to Fjordkraft’s core activities, electricity and mobile teleph- ony. Everything from heat pumps and home chargers to reconditioned mobile phones are oﬀered. Fjordkraft sells Apia’s charging cable, which has plant-based plastic insulation and 100 per cent recycled packaging, making it one of the most environmentally friendly charging cables. In 2023, we are exploring more opportunities for greater reuse. An important Marketplace product concerns sale of the real-time PULS meter to both Fjordkraft and TrøndelagKraft customers. This connects to customers’ smart meters (AMS) and sends data to the app. Customers can then view their own electricity consumption in real time and get more insight into how their consump- tion can be reduced. Energy footprint Fjordkraft’s app includes a function that displays the energy footprint of the electricity used by customers. This was developed in collaboration with Ducky AS in 2021. The energy footprint is the sum of all greenhouse gas emissions Part 2 – 2.3 ESG-report The energy footprint in Fjordkrafts app. App for Fjordkraft, TrøndelagKraft, Gudbrandsdal Energi and Nordic Green Energy. The NGE app was launched in Finland in Q1 2023. Annual report 2022 35 Part 2 – 2.3 ESG-report from the customer’s energy consumption. We measure this in carbon equivalents (kgCO2e). Both CO2 and other greenhouse gases are included. To determine each customer’s footprint, we multiply the energy consumption in kilowatt hours by a factor that describes how much CO2 the energy emits. Together with the energy footprint, custom- ers get good tips on how to reduce it. Did you know, for example, that if you use your tumble dryer three times less per week over the course of a full year, you will use 300-500 kWh less per year? You can save 500 kWh or 198 kgCO2e on an annual basis. Solar cells for private customers In collaboration with Solcellespesialisten, Fjordkraft designs solar panel systems in dialogue with customers 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. Prosumers, i.e. customers who in some periods produce more electricity than they consume, can sell the surplus production to Fjordkraft. Prosumers can choose between selling surplus production continuously at market price, or using Solkonto. Solkonto (solar account) functions as a vir- tual battery, whereby customers can save up kWh on an unlimited basis and then withdraw this power at a later time. Since the savings are in kWh, customers can make a proﬁt by storing surplus production from the summer months and using this energy when their own production drops and electricity prices rise during the winter months. Customers therefore do not have to invest in physical batteries. The power stored on Solkonto must be used within 18 months of its production. Withdrawal can be managed by customers themselves from the Fjordkraft app. Solar panels will continue to be a signiﬁcant investment for private households. To make it even easier to invest in solar panels, Fjordkraft collaborates with DNB on Green Loans. As part of the ordering process, customers can see the price of loan-ﬁnanced solar panels per month and can choose between loans with and without security. Climate-smart solutions for the business market The companies in Elmera Group want to be a business’ energy partner. Under the climate-smart umbrella, we oﬀer innovative products and services that help companies achieve a more energy-eﬃcient everyday life. 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. 2022 was the year in which demand really gained momen- tum. We oﬀer solar panels to companies as an “Energy-as-a-Service” solution and as pur- chased systems. The Energy-as-a-Service Part 2 – 2.3 ESG-report Photo: Frode Fjellstad Annual report 2022 36 Part 2 – 2.3 ESG-report Part 2 – 2.3 ESG-report solution entails that the building owner makes their roof available, and that a long- term agreement to purchase electricity from the system is established. By handling project design, ﬁnancing, installation and operation, we eliminate the entry barriers for companies. The customer beneﬁts from green electric- ity and predictable electricity prices, without making any investment themselves. The solar panel system can also have a positive impact on the 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). The climate-smart concept is oﬀered across our Norwegian companies: Fjordkraft, Gudbrandsdal Energi and TrøndelagKraft. In the autumn of 2022, we launched our latest product, “Ladbart” (Chargeable), where we reuse batteries from electric cars as sta- tionary 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 con- sumption and locally store their own surplus energy production. Since the batteries are in their second life cycle, Ladbart is also virtually emission-free. Business customers are also oﬀered guar- antees of origin, consulting, energy labelling and energy mapping. All buildings over 1,000 m² must be energy labelled every ten years and have a valid energy certiﬁcate. This is mandatory for anyone selling or renting out commercial buildings. Energy mapping is the more extensive mapping of the building’s energy consumption and how to reduce it. All business customers also have access to greenhouse gas accounts that adhere to the Greenhouse Gas Protocol’s, standard, both through “Min Bedrift” (My Business) and via the Klimahub climate portal. Home charger for electric cars Fjordkraft oﬀers private customers home chargers for electric cars and plug-inhybrids. The Norwegian Directorate for Civil Protection and Emergency Planning (DSB) recom- mends owners of electric cars to procure an approved wall charger for charging at home. It is not permitted to use an ordinary socket for regular charging because these sockets can be prone to overload and earthing faults. Nevertheless, regular charging in an ordinary socket is very widespread. Besides facilitating the use of rechargeable vehicles, Fjordkraft wants to make it easier for customers to charge safely. Ladestasjoner.no Fjordkraft provides the ladestasjoner.no ser- vice, which is available online and as a sep- arate app. By using our charging map that retrieves data from Nobil, car owners can eas- ily ﬁnd nearby charging stations and get an overview of which charging points suit the var- ious types of electric cars. The charging map provides an overview of more than 10,000 charging points in Norway and the Nordic region. Ladestasjoner.no also provides tips and advice on rapid charging and everything else that people need to know about charging electric cars. Guarantees of origin from Norwegian hydroelectric power Guarantees of origin are an electricity label- ling scheme to show electricity customers that a given amount of power was generated from a speciﬁc energy source. The scheme was introduced with the EU’s ﬁrst renewable energy directive in 2001 to give consumers a choice between renewable and non-renewa- ble power. Power producers who sell guaran- tees of origin also receive extra income from their renewable power production. While purchasing electricity with guarantees of origin is widespread in the business market, there has been limited demand in the private market. Elmera Group has oﬀered guaran- tees of origin under the collective designa- tion 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. 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. The charging station app had 208 000 users in 2022. Annual report 2022 37 Social Part 2 – 2.3 ESG-report Annual report 2022 38 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. Working environment, absence due to illness and welfare The start of 2022 was marked by the contin- ued pandemic. Many people were still work- ing from home, but fortunately people could get back to the physical workplace as Norway opened up more and more. For many people, returning to the physical oﬃce from their home oﬃce was a major transition. For others, it was much anticipated. Fjordkraft conducted an employee satis- faction survey in 2022. The goal is a Human Capital Index score of 25 or better. In 2022, we scored 25.1. The Group’s Nordic company, Nordic Green Energy, uses an employee sat- isfaction survey with a scale from 1 to 5. The results for 2022 were 4.31 for the Sweden department, and 3.78 for the Finland depart- ment. Group statistics for absence due to illness in 2022 only apply to the Norwegian part of the Group. Nordic Green Energy (NGE) will not be included in the Group’s absence due to illness statistics until 2023. The target for absence due to illness in Elmera Group is set at below 4.9 per cent as from 2023. In 2022, the absence due to illness ﬁgures were as follows for the various companies: employees of Elmera Group ASA 3.5 per cent, Fjordkraft AS 9.3 per cent, Gudbrandsdal Energi 2.7 per cent and NGE 3.89 per cent. The ﬁgures for 2022 are not directly comparable with the ﬁgures for 2021. In 2021, we only reported ﬁgures for absence due to illness related to Fjordkraft AS. 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. Part 2 – 2.3 ESG-report Teambuilding in Fjordkraft. Some of our employees took part in “Trolljegeren”. Photo: Stavanger Fotoklubb Annual report 2022 39 Part 2 – 2.3 ESG-report Part 2 – 2.3 ESG-report Gender equality 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 proportions of women/men in senior positions must be equivalent to the propor- tions of women/men employed. At the end of 2022, women accounted for 45 per cent of all employees. The Group management team consists of nine people; two women and seven men. The Board of Directors of Elmera Group consists of eight people; ﬁve women and three men. There is a larger proportion of men with per- sonnel responsibility within our sales activi- ties. This is being addressed in recruitment processes. Attractive for young people Elmera Group had two trainees in 2022. Jenny Trollebø Byrkjeland was the ﬁrst, via Trainee Innlandet. She was followed by Henrik Eliassen, our ﬁrst sustainability trainee, via the Bergen Chamber of Commerce and Industry’s trainee programme. In 2022, the IT department brought in ﬁve newly qualiﬁed developers via Experis Academy. They take an intensive course last- ing around three months at Experis Academy, and then start a trial year at companies, with the possibility of permanent employment on completion of the contract. We have made use of this programme in recent years. It pro- vides a great opportunity for graduates to get a job and is a good way for us to spot new young talent. In addition, three students were employed immediately after their graduation. The Group is also an attractive workplace for young people who want to combine their studies with part-time jobs in sales or cus- tomer service. Many of these go on to full-time positions in the company. Of 28 new employees in 2022, 11 external candidates and 17 hired employees gained a permanent job. Competence development Our skilled employees are the Group’s most important resource. It is crucial to our compet- itiveness that we are able to further develop this expertise. We must also be able to attract the required expertise now and in the future. We are determined to achieve this. The Group encourages and facilitates com- petence development. Through our study support scheme, permanent employees can apply for grants for continuing education. They can apply for support for individual sub- jects 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 com- pletion of the programme. In the grant alloca- tion process, there is emphasis on whether the education programme is relevant for the Group. In this way, the scheme will contribute to the required development of new compe- tences. In 2022, there were ﬁve applicants for the spring semester and nine applicants for the autumn semester. In Gudbrandsdal Energi, one employee completed a Master’s degree with support from the company. Another employee started a Master’s degree in the autumn of 2022, which will continue into 2023. NGE has a similar scheme under which it is possible to apply for leave of absence for studies. Most studies are funded by the public authorities. NGE therefore has no costs associated with supporting students. As an employer, we encourage our employ- ees to develop their knowledge. Over the years, the company has devoted considera- ble resources to this. Competence develop- ment concerns everything from courses and studies to learning through everyday assign- ments and challenges. It is the employee’s immediate manager that ensures continuity and the individual’s development. As of today, the Group does not have systems that provide an overview of the number of hours of com- petence building per year, broken down by gender and job category. Reporting on this issue therefore presents a challenge. Team development is oﬀered to all teams in the Group. HR facilitates workshops based on the DISC model, or Big5, via the provider Assessio. 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 they work closely with on a daily basis even better. This results in measures for a smoother and Link to the gender equality report Annual report 2022 40 Part 2 – 2.3 ESG-report Part 2 – 2.3 ESG-report more eﬀective working life, in interaction with the rest of the team, by getting to know each other better and ﬁnding even better ways to collaborate and develop. • Measures such as job rotation are also used in parts of the Group, at Gudbrandsdal Energi. • The management team in Elmera Group and its subsidiaries regularly share infor- mation and expertise at meetings where all managers in the company are gathered. This is shared across units and organisa- tions. Any manager with personnel responsibility must undertake regular follow-up of their employees, to ensure employee commitment and professional development. The Group had no interdisciplinary compe- tence programmes for employees in 2022. Each unit is responsible for ensuring this for its employees. This means that we do not have records of everything that has been completed. Examples of competence-enhancing meas- ures that have been implemented include activities such as the Fjordkraft Way of Sales. This involves all sales representatives, under the private and business academy, which is an academy programme that is held for all business employees at Fjordkraft. Customer service staﬀ at Fjordkraft had 57 hours of training time and professional updating per employee in 2022. Gudbrandsdal Energi holds monthly professional evenings for all customer service employees, where relevant topics and issues are discussed. NGE is engaged in collaboration with the University of Vaasa, where professional challenges are addressed and used as training material. In 2022, all managers in the Group with personnel responsibility attended our annual leadership development seminars. In 2022, psychological safety was on the agenda. The seminars were held with personal attend- ance to ensure even greater professional beneﬁt, sharing of experience, networking and strengthening of existing relationships. At NGE, leadership development is linked to the employee satisfaction survey, including leadership days where, among other things, managers work with Elmera Group’s leader- ship 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 opportu- nity to share their thoughts and opinions in an open comment ﬁeld. These are anonymised and cannot be traced back to the respond- ent, but can still provide useful learning for the team. At Gudbrandsdal Energi, similar questions are used, both in the employee sat- isfaction survey and in performance appraisal interviews. Last year, NGE launched a new edition of the employee satisfaction survey in collabo- ration with pension insurance provider ELO. Their survey focuses on the same issues, including 25 statements in ﬁve categories to be considered by employees. Expertise is shared across the Group’s com- panies, for example on data protection. 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: • Everyone employed by Elmera Group ASA 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 information 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 pension provider KLP. • NGE: Pensions are also in focus, but to date no employees have taken retirement. No employees were approaching retire- ment age in 2022. Termination of employment: • Elmera Group assists employees in pro- cesses where an employment relationship is to end. This involves support from the immediate manager, HR, another relevant resource person, or several of these in combination. Career guidance tips are given by NAV 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, including Gudbrandsdal Energi and NGE. Annual report 2022 41 Part 2 – 2.3 ESG-report Part 2 – 2.3 ESG-report The Group has used promise-based man- agement since 2004. This means that all employees make promises that will support the company’s overall goals. In this way, everyone in the company will be on the same page by focusing on the same targets. We use result and follow-up interviews, abbreviated as ROS, between manager and employee to follow up on the individual’s performance and clarify the needs and expectations of the individual employee. These take place once a quarter and, together with promise-based management, are an important tool in main- taining the required competence level and achieving good results. All managers in the Group have a special responsibility for regular follow-up of their employees. 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 Promise follow-up • Q2: Performance appraisal interviews and updating promises • Q4: ROS – interview and Promise follow-up In NGE, quarterly follow-up interviews are conducted with all employees, with at least one interview deﬁned as a performance appraisal interview. This is followed up in interviews held at least once per month. Managers with few employees follow up with interviews every other week to ensure profes- sional development, clear assignments and general welfare. In addition, managers conduct shorter or longer status interviews with their employees to ensure that adopted plans are implemented and adjusted for any necessary changes. This is also followed up at team level in e.g. depart- mental 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 generated 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, interviews are held as described above, where Timelapse was the system used in 2022. When new employees are appointed, the manager is responsible for ensuring that the new employee receives a thorough intro- duction to work tasks and procedures, as well as the 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 com- petence-enhancing measures for all employ- ees and allocate resources where deemed necessary. The Group has a great diversity of sound expertise. Internal competence sharing is therefore important. Managers can bring in external expertise in the form of courses and advisory services. Managers should not only facilitate other employees’ competence development, since as good role models, they must also ensure their own professional development. The company’s managers attend a leadership development programme that comprises several seminars. Here, managers have the opportunity to share experience and are chal- lenged through discussion and case solving, in addition to presenting professionally rele- vant content. This applies to the entire Group. Annual report 2022 42 Part 2 – 2.3 ESG-report Business partners and certifications Eco-Lighthouse Elmera Group’s oﬃces in Bergen, Trondheim, Sandefjord, Hamar and Kongsvinger are cer - tiﬁed under the Eco-Lighthouse certiﬁcation scheme Our oﬃce in Sortland is in the pro- cess of certiﬁcation. Being an Eco-Lighthouse means working systematically on measures to achieve more environmentally friendly opera- tions and a good working environment. Each year, the various business units must prepare a climate and environmental report in which the eﬀect of the actions is measured and new goals are set. The Eco-Lighthouse certiﬁcation scheme is recognised by the EU. Klimapartnere Vestland Elmera Group is a member of the regional net- work 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 over 65 public and private enterprises. Klimapartnere Vestland publishes an annual report on its members’ combined emissions. FUTURE-PROOF In September, CEO Rolf Barmen signed the FUTURE-PROOF poster on behalf of the entire Elmera Group. The poster was prepared by the Rafto Foundation 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 experience, 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 complying with the UN Guiding Principles on Business and Human Rights. S-HUB Elmera Group is a member of S-HUB: Sustainability Hub Norway. S-HUB’s aim is to be Norway’s leading knowledge network for sustainable business operations in busi- ness and industry. The members are large and small Norwegian companies that want to learn more across diﬀerent industries. Shift – Greenwashing Poster The Greenwashing Poster consists of ten prin- ciples designed to prevent companies from greenwashing their own activities. The poster was prepared by Skift, Zero, WWF and The Future in Our Hands. Fjordkraft signed the poster in the summer of 2020 and announced that we would do our utmost to adhere to the poster’s principles in all marketing and com- munication. 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 businesses can endeavour to fulﬁl. For us, this will be a supplement to our climate com- mitted requirement for all our ﬁxed suppliers. Sustainability reporting to customers Elmera Group is not alone in setting require- ments for its suppliers. In 2022, as an electricity supplier to a number of large Norwegian com- panies, we became subject to requirements to undertake various forms of sustainability reporting. We welcome this development. We can also see that the wide selection of report- ing services, with sometimes highly varying reporting and documentation requirements, makes this a labour-intensive process. Part 2 – 2.3 ESG-report Elmera Groups CEO, Rolf Barmen, signing the FUTURE-PROOF poster. To the left, Johannes Magnus from Bergen Chamber, to the right; Jostein Hole Kobbeltvedt, Executive Director at Rafto Foundation for Human Rights. Photo: Mette Havre Annual report 2022 43 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. 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 at page 56. Annual report 2022 44 Part 2 – 2.3 ESG-report Responsible procurement 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 having strict requirements for social and environmental conditions in all sup- plier contracts. Some services are not cov- ered 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 percent of the total. The suppliers in question are still considered in our due-dili- gence processes. In addition to the requirements set through the “Klimanjaro”-initiative, Elmera Groups climate pledge, all suppliers are required to operate in compliance with the ILO conven- tions and speciﬁc policies for pay and working conditions. Additionally, the Group have a strict anti-corruption policy. 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 terminated due to non-compliance with environmental or social criteria during 2022. 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, religious 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 own activities, and that we will act immediately if we detect vio- lations of the guidelines. We work to avoid and mitigate negative impacts on human rights in activities directly linked to our business through our suppliers and partners. All our suppliers are obliged to respect the eight core ILO Conventions on: : • 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 Groups 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 own operations and in the company’s supply chains. The statement brieﬂy sets out Elmeras approach to the challenge and brieﬂy describes Elmeras continuous work in the area. In general, Elmera is conscious of its responsibility to stop actual negative conse- quences and to limit signiﬁcant risks of nega- tive consequences in our supply chain. Risk for adverse impact on fundamental human rights and decent working conditions is inte- grated in the procurement policy. All new sup- pliers must document it’s supply chain, and signiﬁcant risks of negative consequences prior to contract implementation directly in the guidelines and procedures to the procure- ment processes. A thorough human rights due diligence was conducted in 2022, in compliance with the Norwegian Transparency Act which came into force 1st of July. After mapping our entire value chain, service providers and suppliers Part 2 – 2.3 ESG-report Annual report 2022 45 Part 2 – 2.3 ESG-report to Fjordkraft Market place were identiﬁed as two segments associated with the most signiﬁcant risks of adverse impact. The two segments were divided into supplier cate- gories and scored based on probability and severity of potential human rights breaches. The assessment concluded that production of solar panels and IT equipment, including mobile phones, are associated with signiﬁ- cant risks of severe human rights violations. The risks are mainly linked to the extraction of polysilicon, a critical component of solar panels, and cobalt, a critical component in batteries used in computers and mobile phones. Around 40 per cent of the worlds 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 have made inquiries and are in dialogue with two relevant suppliers to make sure that com- ponents are sourced responsibly. Based on the assessments, Elmera has implemented measures to cease or mitigate actual adverse signiﬁcant risks related to fun- damental human rights and decent working conditions. There is a common understand- ing between Elmera Group and the suppliers in question that further investigations of the supply chain are necessary. However, the pandemic has made it diﬃcult to gain physical access to key sub-contractors. Speciﬁcally, access to China, the biggest manufacturer of solar panels by some distance, has been restricted. Elmera will continue to monitor and assess these risks together with our supplier. Notification-routines are available on: fjordkraft.no/apenhetsloven Ethics and integrity Elmera Group has a clear and unambiguous attitude towards anti-corruption. Corruption undermines integrity and ethical business activities, and pose a threat to our opera- tions, reputation, individuals, and society at large. We have zero tolerance for corrup- tion and strongly oppose conduct that vio- lates anti-corruption legislation. 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 international standards. They were updated and approved by the Board of Directors in 2022. All employees must sign a declaration each year conﬁrming compliance with the guidelines. As part of the anti-corrup- tion work, each department performs dilemma training annually. This has been completed in 2022. By simulating situations where inter- nal 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. 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. Before any new partnership is established, the employee responsible for the agreement must check out any potential conﬂict of interest and risks of corruption. The Group has the right to terminate an agreement if suppliers are convicted or ﬁned for violation of this require- ment. 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 not in 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 continuously monitored and reported to the group executive management. To reduce risk associated with corruption in the supplier sector, Elmera Group avoids suppliers from countries with high corrup- tion 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-creation. Along with the other Scandinavian countries, 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 the fact that Elmera Group does not have the capacity to constantly monitor compliance. Part 2 – 2.3 ESG-report Link to The Group’s Code of Conduct. Annual report 2022 46 Part 2 – 2.3 ESG-report Part 2 – 2.3 ESG-report Attractive reputation Reputation is in many ways the reﬂection of our actions. How we are perceived by the cus- tomers, investors, employees, and authorities is integral to our ability to deliver on strategic goals, and thus, our impact on environmental, social and economic conditions. Its funda- mental importance is why it is classiﬁed as one of our most material topics. Our industry has been under constant scrutiny throughout 2022. The sudden inter- est dating back two years is closely corre- lated with a substantial increase in electricity prices in the Nordics compared to historical data. In 2022 the prices exceeded anything we have seen before. Electricity is a good that everyone relies upon, and increasingly so. Consequently, it has been challenging for private consumers and businesses to cope with the huge increase in costs from electricity consumption. As electricity prices aﬀects us all it has become one of the most discussed political topics. This, mixed with a continued stream of heavy criticism from the Director of the Norwegian Consumer Council where she repeatedly tries to discredit the entire industry, has had a negative impact on reputation. Especially our biggest brand, Fjordkraft, have endured negative publicity. Even though we believe some of the criticism to be unfounded we must acknowledge the feedback and act in a constructive manner to improve, to the best for our customers. We have taken several measures the past year to accommodate regulations and to enhance the customer experience. We wish to be per- ceived as trustworthy and transparent. These measures are all part of a holistic and con- tinuous approach to enhance reputation and customer satisfaction. The measures include: • Simplifying our product portfolio by dras- tically reducing the number of electricity contracts available. • Discontinued the sale of variable contracts. Price volatility combined with the introduc- tion of the electricity support scheme and increased regulations have increased risk associated with the product substantially, and thus, harmed the value proposition. Existing customers have been advised to re-evaluate their choice of contract and been recommended a spot contract. • Stopped door-to-door sales. We want to meet the customers in their preferred sales channels. Renewables Norway, the indus- try organization for production, distribution and trading of electricity, have since made it a requirement 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 companies’ websites, in line with a revised regulation that came into force 1st of November. The market conditions have emphasized the importance of our role as experts. We can make sure that our customers make informed decisions by being proactive energy and cli- mate advisers. Throughout 2022 the Group’s power trading competencies saved costum- ers millions through positive hedging posi- tions. In the Consumer segment Spot with trading was relaunched and beat the market price 12 out of 12 months. With a consumption of 25.000 kWh the estimated savings amounts to 9.500 NOK, adjusted for seasonal varia- tions. Additionally, Gudbrandsdal Energi esti- mates that app users save on average 1.579 NOK compared to other customers. In the Business segment successful hedges worth in excess of 1.6 billion NOK was made on behalf of the customers, easing the burden of increased prices and the lack of a suﬃ- cient support scheme. These are all prime examples of how we as electricity retailers create value. 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 personal data of our employees, customers, and other partners in a safe and secure manner. We are com- mitted to safeguarding the individual’s rights and maintaining integrity and conﬁdentiality associated 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 2022 it is registered 11 security cases concerning data privacy. One of the cases were reported to the Norwegian Data Protection Authority. This was solved, and no sanctions were imposed. The remaining cases concerned very few customers and had little to no consequences for the parties Annual report 2022 47 Part 2 – 2.3 ESG-report involved. Thus, they were not reported to the relevant national government bodies. Incidents of potential non- compliance The Group Companies have not been sub- ject to any non-compliance with regulations resulting in a ﬁne, penalty or any other gov- ernmental reaction. However, there have been some issues that have received attention from the Norwegian Consumer Authorities. These cases are in particular related to The Cancellation Act (Angrerettsloven), product reporting to the authorities and the electricity contracts in the variable-portfolio. The Consumer Authorities expressed in a joint letter to the power supply industry that they were of the perception that the majority of the industry, including Group Companies, were not giving consumers suﬃcient informa- tion of their right to cancel an agreement within 14 days, in compliance with The Cancellation Act. The Group Companies adhered to the recommendations and rectiﬁed the situation without challenging the legal perception of the Norwegian Consumer-authorities. Fjordkraft was contacted by The Norwegian Regulatory Authorities (RME), claiming that Fjordkraft failed to report a complete prod- uct-portfolio (power supply agreements) to Strømpris.no which all power supply compa- nies are committed to. The error arose due to Fjordkraft’s belief that it was possible to bundle similar products and report these as one product. Fjordkraft rectiﬁed the situation immediately upon RMEs request. In 2022 the Elmera Group power supply companies received signiﬁcant criticism from the Consumer Authorities, as well as the media and customers, for the variable agree- ments -portfolio. The variable agreements are fully compliant with Norwegian legisla- tion. Up until that point, variable agreements constituted a signiﬁcant component of the Norwegian power supply retail industry and was the preferred agreement amongst many customers. However, due to inconsistency between the set-up of the variable-agreement and the authorities’ electricity support scheme (Strømstøtten), a signiﬁcant number of cus- tomers were subject to increased electricity costs in Q4 2022. This resulted in criticism of the use of variable agreements. Subsequently, the Group decided to stop all sale of variable products. The legality of the variable-portfolio was never in question in 2022 and so far in 2023, but the authorities have expressed that they are looking into possibilities of prohibiting Part 2 – 2.3 ESG-report such products in the future. Due to the increased electricity costs in 2022, the Norwegian power supply retail industry received criticism from consum- ers. The electricity marked is complex, and therefor it is diﬃcult for customers to under- stand the retailer’s role, and that the retailer is not responsible for setting the spot-price in the marked. This was addressed through cross-sector media initiatives and regula- tory discussions. Resultingly, over the span of the year, consumer perception generally changed. In Norway, there is an independent tribunal (Elklagenemnda) handling consumer com- plaint related to electricity supply. In 2022, Fjordkraft was ﬁled in 48 cases, pending result in 2023. Being the largest power supply retails company in Norway, it is natural that Fjordkraft receive more complaints than smaller compa- nies. In percentage, the number of complaints is extremely low. In 2022 the customer was successful or partially successful in 3 cases ﬁled in 2021. Without an admission of guilt, Fjordkraft complied with all received recom- mendations. 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 organizations Renewables Norway and DistriktsEnergi and is a voluntary certiﬁcation scheme for elec- tricity retailers. Certiﬁed companies have to adhere to several requirements involving per- sonnel training, marketing, products, sales, billing and customer service. The certiﬁcation body is DNV, an international quality assur- ance and risk management company head- quartered in Norway. Annual report 2022 48 Part 2 – 2.3 ESG-report GRI - reporting 2022 - 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 26 2-3 Reporting period, frequency and contact point Reporting period: 1.1.2022-31.12.2022. Reporting cycle: Annually, in addition to ﬁnancial quarterly reports. Publication date: 29.03.2023. Contact point 2-4 Restatements of information No restatements 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 2-7 Employees ESG report - Social - Our people, Board of Director's report - Organisation, Equal opportunities report 2-8 Workers who are not employees Equal opportunities report - Section 1.5 - Position level and salary 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 and 9. The work of the board of directors 2-13 Delegation of responsibility for managing impacts Corporate Governance Report - 9. The work of the board of directors and 10. Risk management and internal control, Board of Directors report - Organisation 2-13-a-ii N/A 2-14 Role of the highest governance body in sustainability reporting ESG report - The right balance 2-14-b N/A 2-15 Conﬂicts of interest Corporate Governance Report - 9. The work of the board of directors Part 2 – 2.3 ESG-report Annual report 2022 49 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 Board of Directors report - ESG 2-18 Evaluation of the performance of the highest governance body 2.19-c: No actions taken Corporate Governance Report - 9. The work of the board of directors 2-19 Remuneration policies 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 not up for vote in 2022. Guidelines for remuneration 2-21 Annual total compensation ratio 2-21-a: Ratio of annual total compensation of the CEO to the aver- age annual total compensation for Employees in Fjordkraft (1) and Elmera Group ASA (2): 7,83 (1) and 5,94 (2). Our remuneration report for 2022 will be published here. Information unavail- able/incomplete: average total annual compensation used instead of median. NGE not included in the calculations. GE not included in 2-21-a. GRI 2 : GENERAL DISCLOSURES 2021 - STRATEGY, POLICIES AND PRACTICES 2-22 Statement on sustainable development strategy Board of Directors report - ESG 2-23 Policy commitments https://investor.elmeragroup.no/corporate-social-responsibility/ ethics-at-elmera-group/ ESG report - Governance - Responsible procurement 2-24 Embedding policy commitments ESG report - Governance - Responsible procurement, Due diligence report on human rights 2-25 Processes to remediate negative impacts ESG report - Governance - Responsible procurement 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 2022 50 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 reputation - 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. 2-30-b: Information unavail- able 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 3-2-b N/A: First material assessment conducted in 2022 MATERIAL TOPIC : ATTRACTIVE REPUTATION 3-3 Management of material topics ESG report - The right balance, Governance - Attractive reputation TOPIC STANDARD: GRI 417 - MARKETING AND LABELING 417-2 Incidents of non-compliance concerning product and service information and labeling ESG-report - Governance - Attractive reputation - Incidents of potential non-compliance 417-3 Incidents of non-compliance concerning marketing communications ESG-report - Governance - Attractive reputation - Incidents of potential non-compliance TOPIC STANDARD: GRI 418 - CUSTOMER PRIVACY 418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data ESG report - Governance - Attractive reputation - Privacy protec- tion and information security 418-1-c: N/A ELMERA DISCLOSURE Elmera 1 Our brands are perceived as trustworthy and transparent by 50 % or more of our customers ESG-report - The right balance Information incomplete: Reported on FK and GE quarterly, and NGE annually. The goal was implemented late 2022. Results for NGE will ﬁrst be available in 2023. Elmera 2 Customer satisfaction above 70 for all brands ESG-report - The right balance Information incomplete: Nordic Green Energy is not included in the survey which the results are based upon. Results for NGE will ﬁrst be available in 2023. Part 2 – 2.3 ESG-report Annual report 2022 51 Part 2 – 2.3 ESG-report GRI reference Description of the GRI standards Comments Reference Omission MATERIAL TOPIC : RESPONSIBLE PROCUREMENT 3-3 Management of material topics ESG report - The right balance, Governance - Responsible pro- curement 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 - Responsible procurement TOPIC STANDARD: GRI 205 - ANTI-CORRUPTION 205-1 Operations assessed for risks related to corruption ESG report - Governance - Responsible procurement 205-2 Communication and training about anti-corruption policies and procedures ESG report - Governance - Responsible procurement - Ethics and integrity 205-3 Conﬁrmed incidents of corruption and actions taken No conﬁrmed incidents TOPIC STANDARD: GRI 308 - SUPPLIER ENVIRONMENTAL ASSESSMENT 308-1 New suppliers that were screened using environmental criteria ESG report - Governance - Responsible procurement 308-2 Negative environmental impacts in the supply chain and actions taken ESG report - Governance - Responsible procurement TOPIC STANDARD: GRI 407 - FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING 407-1 Operations and suppliers in which the right to freedom of association and collec- tive 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 - Reporting on the Transparency Act 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 3 All regular suppliers must be climate committed In our latest thorough due diligence process, conducted in 2021, all regular suppliers were deemed compliant. Only a few minor inconsistencies were pointed out and corrected. We are not aware of breaches in 2022. Part 2 – 2.3 ESG-report Annual report 2022 52 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, Governance - Responsible procurement ELMERA DISCLOSURE Elmera 4 Number of customers with solar production to be doubled annually Base year is 2022 and development will be reported for the ﬁrst time in 2023. Conﬁdentiality contraint: We will not report spesiﬁc sales numbers for competitive reasons. MATERIAL TOPIC : LOCAL ENERGY PRODUCTION FROM SOLAR POWER 3-3 Management of material topics ESG report - The right balance, Environment - Products and services for the low-emission society, Governance - Attractvie reputation ELMERA DISCLOSURE Elmera 1 Our brands are perceived as trustworthy and transparent by 50 % or more of our customers ESG-report - The right balance Information incomplete: Reported on FK and GE quarterly, and NGE annually. The goal was implemented late 2022. Results for NGE will ﬁrst be available in 2023. Elmera 2 Customer satisfaction above 70 for all brands ESG-report - The right balance Information incomplete: Nordic Green Energy is not included in the survey which the results are based upon. MATERIAL TOPIC : USEFUL DIGITAL CUSTOMER SOLUTIONS 3-3 Management of material topics ESG report - The right balance, Environment - Products and services for the low-emission society ELMERA DISCLOSURE Elmera 5 80 % of customers actively interact with our digital interfaces Interacting with our digital interfaces means using our app services. ESG-report - The right balance Information incomplete:data for GE and NGE not available. Goal implemented late 2022. The structure to compile the correct data is in place from 2023 for all brands. MATERIAL TOPIC : RIGHT COMPETENCE - ATTRACT, RETAIN AND DEVELOP 3-3 Management of material topics ESG report - The right balance and Social TOPIC STANDARD: GRI 401 - EMPLOYMENT 401-1 New employee hires and employee turnover Equal Opportunities report - Section 1.2 and Part 3 401-2 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 Part 2 – 2.3 ESG-report Annual report 2022 53 Part 2 – 2.3 ESG-report GRI reference Description of the GRI standards Comments Reference Omission 401-3 Parental leave Equal Opportunities report - section 1.4 - Parental leave and Part 3 - Parental leave 401-3-d Information not avail- able: We do not have statis- tics for employment status 12 months after parental leave ended as we do not se the relevance in the connection. TOPIC STANDARD: GRI 404 - TRAINING AND EDUCATION 404-1 Average hours of training per year per employee ESG report - Social - Competence development Information incomplete: We are unable to provide informa- tion on hours of training per employee. This is something we will try to improve going forward. 404-2 Programs for upgrading employee skills and transition assistance programs ESG report - Social - Competence development 404-3 Percentage of employees receiving regular performance and career development reviews ESG report - Social - Competence development TOPIC STANDARD: GRI 405 - DIVERSITY AND EQUAL OPPORTUNITY 405-1 Diversity of governance bodies and employees Board of Directors, Equal Opportunities report - Section 1.2 405-2 Ratio of basic salary and remuneration of women to men Information not available: Only calculated and reported biennial, in line with Norwe- gian requirements. Will be reported in 2023. TOPIC STANDARD: GRI 406 - NON-DISCRIMINATION 406-1 Incidents of discrimination and corrective actions taken No reported incidents ELMERA DISCLOSURE Elmera 6 Human Capital Index above 25 NGE uses a diﬀerent survey with a scale from 1 to 5. This target is therefore not directly applicable for them. However, performance 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 uses a diﬀerent survey and reports on a diﬀerent scale. ADDITIONAL REPORTED TOPIC STANDARDS ECONOMIC TOPICS TOPIC STANDARD: GRI 201 - ECONOMIC PERFORMANCE 201-1 Direct economic value generated and distributed Financial statement Elmera Group 201-2 Financial implications and other risks and opportunities due to climate change ESG report - Environment - Climate risk 201-3 Deﬁned beneﬁt plan obligations and other retire- ment plans Notes Elmera Group - Note 18 201-4 Financial assistance received from government Notes Elmera Group - Note 16 Part 2 – 2.3 ESG-report Annual report 2022 54 Part 2 – 2.3 ESG-report GRI reference Description of the GRI standards Comments Reference Omission ENVIRONMENTAL TOPICS TOPIC STANDARD: GRI 302 - ENERGY 302-1 Energy consumption within the organization ESG report - Environment - Climate accounts, Key ﬁgures 302-3 Energy intensity 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 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 Part 2 – 2.3 ESG-report Annual report 2022 55 Part 2 – 2.3 ESG-report 2.4 Corporate Governance Report Part 2 – 2.4 Corperate Governance Report Annual report 2022 56 Annual report 2022 57 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 www.nues.no. The Code of Practice is not revised in October 2022. 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 retailer in the Nordics. Based on our core values “simplify”, “be friendly”, and “create value”, our goal is for Elmera Group to deliver electricity to the power outlets of 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 in both the private consumer and the busi- ness consumer markets. 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: • Proﬁtable growth • Product innovation • Digitalisation and automation • A strong brand • Customer satisfaction • Operational excellence • Cost leadership The Board of Elmera Group ASA conducts an annual evaluation of the Group’s current strat- egy 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 produced 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 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 2022 58 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 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 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 • 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 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. At the General Meeting in 2021, the Board was granted the following authorities: • The authority to increase the Company’s share capital by up to NOK 3,428,454 through issuance of a maximum of 11,428,180 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 2022, however it will expire no later than 30 June 2022. As per the date of General Meeting in 2022, there has not been an issuance of new shares. • The authority to increase the Company’s share capital by a maximum of NOK 342,845.40 through issuance of a maxi- mum of 1,142,818 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 2022, however it will expire no later than 30 June 2022. As per the date of General Meeting in 2022, there has been an issuance of 70,000 new 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. Part 2 – 2.4 Corporate Governance Report Part 2 – 2.4 Corporate Governance Report Annual report 2022 59 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 1,714,227. The authority may only be used in connection with the Company’s bonus programme, in connection with acqui- 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 2022, though no longer than until 30 June 2022. As per the date of the General Meeting in 2022, the authorisation has not been utilised. Capital structure As at 31 December 2022, the Group’s total non-current assets amounted to NOK 4,313 million and total current assets to NOK 10,059 million. The Group’s total non-current liabil- ities amounted to NOK 3,165 million, total current liabilities to NOK 9,967 million and shareholders’ equity to NOK 1,240 million. The management and the Board regularly evalu- ate whether the Group’s capital structure is appropriate for its objectives, strategy and 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 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 ten meetings and in addi- tion two meetings by e-mail circulation of documents. The Company’s annual General Meeting took place on 26 April 2022. 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 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. 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 Part 2 – 2.4 Corporate Governance Report Annual report 2022 60 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. 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: https://investor.fjordkraft.no/en/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 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. 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 2021-2022 are listed in the notes to the ﬁnancial statements in the Annual Report 2022. Board members, including their CVs, are presented in this Annual Report and on the website: https://investor.elmeragroup.no. The Board is of the opinion that it has suﬃcient expertise and capacity to perform its duties in a satisfactory 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 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 Board of Directors and the Group’s execu- tive management. The current members of the Nomination Committee are Lisbeth Nærø (Chairman), Ragnhild Stolt-Nielsen and Atle Kvamme. 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 Part 2 – 2.4 Corporate Governance Report Annual report 2022 61 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 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 representatives gave notice of absence at one meeting and one representative at two meetings in 2022. 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. second line and third line. • The ﬁrst line consists of line managers who are risk owners. Division and staﬀ manag- ers own the risk in their division/staﬀ and are responsible for risk assessment and measures being taken in their division/ staﬀ. It is the risk owner’s responsibility to ensure adequate risk management and internal control within his or her area of responsibility. • The second line consists of roles that have professional and methodological responsi- bility, but no responsibility for any proﬁts. The Group’s second line is responsible for facilitating and reporting the Group’s processes for risk management and inter- nal control. The risk management function is part of the second line and consists of Risk Manager, Finance Manager, Head of Security and Head of Power Trading. • The third line consists of the internal audit function which reports directly to the Board’s Audit Committee and performs control of both the ﬁrst and second line. Two or three internal audits are conducted each year based on the internal audit plan. The instructions for risk management and internal control deﬁne the main principles for Elmera Group’s comprehensive risk man- agement and internal control and apply to all parts of the business and all risk categories, including strategic, market, liquidity, credit and operational risk. Risks related to infor- mation security, climate, compliance and cor- ruption and fraud are part of operational risk. The purpose of the instructions is to develop and maintain a framework for overall risk man- agement, to set principles for risk reporting in the business, to create predictability about measures taken to deal with risk, and to ensure an appropriate and eﬀective internal control system. The framework shall ensure uniform processes for identifying, measuring, managing and reporting signiﬁcant risks. The instructions shall describe the limits for the diﬀerent risks that Elmera Group can and will assume to achieve its goals, and what roles the various functions have in relation to risk management. Furthermore, the instructions shall contribute to ensuring that adequate internal control has been established. Elmera Group shall focus on building a strong risk and internal control culture where employees are aware of their responsibility to ensure good risk management and inter- nal control. As a result, internal control shall primarily be targeted at areas where risks are identiﬁed. For the same reason, the fol- low-up of key employees’ compliance with the Company’s code of conduct will involve self-declarations rather than regular audits. Guidelines for risk management and internal control ISO31000 provides the basis for Elmera Group’s framework for risk management. 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 a staﬀ and divi- sion level is to be understood as uncertainty related to the achievement of goals deﬁned 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 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 activities. The Board must annually review and approve the risk management and internal control guidelines through its approval of the instructions for risk management and internal control. The Board has delegated responsibility for monitoring and following up current risk expo- sure to the executive management. The CEO is responsible for ensuring compliance with the instructions given in this document. The CEO is also responsible for carrying out risk assessments from a business perspective. The Group’s CFO bears executive responsi- bility for the management and follow-up of the Group’s risk management and internal control. Elmera Group has established a three-line defence system. This comprises the ﬁrst line, Part 2 – 2.4 Corporate Governance Report Annual report 2022 62 in sub-strategies. Elmera Group practises a general princi- ple that risk is not to be avoided, but taken consciously and controlled while optimis- ing it in relation to earnings. Elmera Group approaches risk systematically and risk man- agement must be an integrated part of the Company’s operational and strategic man- agement. Risk management shall support the achieve- ment of Elmera Group’s overall strategy and be a signiﬁcant part of the strategic plan. Internal control in Elmera Group shall be established at a reasonable and appropriate level, in line with Elmera Group’s values and risk willingness. Risk willingness and limits Risk willingness describes how much risk Elmera Group is willing to assume to achieve goals within diﬀerent categories of risk. A higher risk willingness within a category indi- cates that the Group shall exploit the risks actively, but at the same time is willing to assume exposure to these risks. Lower risk willingness indicates that the Group seeks to limit exposure to these risks. Risk willingness will not necessarily remain constant and may change over time. The CEO and the Group’s ﬁrst line shall make sure that its risk exposure is in line with the limits and guidelines provided. Violations of frameworks and guidelines shall be reported to the Board’s 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. Risk and internal control reporting A risk report shall be submitted to the exec- utive management at least quarterly. The report shall clearly indicate the Company’s most signiﬁcant risks, as well as the proposed measures for managing them. For those risk categories where speciﬁc exposure limits have been set, the report shall also include how these limits has been utilised. In addition to the overall risk report, monthly reports shall be provided for credit risk, liquid- ity risk and market risk. In connection with risk reporting, information on the status of measures adopted by the executive management and/or the Board’s Audit Committee to deal with risk shall also be provided. The Risk Manager, together with the CEO, shall submit a risk report for all risk catego- ries to the Board’s Audit Committee at least semiannually. The report shall clearly identify the Company’s most signiﬁcant risks, as well as proposed measures, responsibilities and deadlines for managing these where relevant. The Group has implemented a contingency plan for handling critical concerns. There has been no such critical concerns in 2022. The various roles in the risk management function are also responsible for notifying the CEO if events and/or uncertainties occur which indicate that risk management activ- ities should be performed with greater fre- Part 2 – 2.4 Corporate Governance Report quency. If there is reason to believe that a conﬂict of interest may exist in relation to the CEO’s assessment and management of risk, the risk management function has the right and duty to report on signiﬁcant risk directly to the Board’s Audit Committee. Each year, the Risk Manager shall compile a report for the executive management on the internal control work performed and the condition of the internal control system. 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 (IFRSs) 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. Stock options in the Company are not held or issued to the Board of Directors. Board members and/or companies they 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 Annual report 2022 63 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 remunera- tion 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 treatment of all participants in the securities market. The Board establishes guidelines for the presentation of this information. A ﬁnan- cial calendar and shareholder information is published on Elmera Group’s web page: investor.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 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 Part 2 – 2.4 Corporate Governance Report 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 2.5 Board of Directors Part 2 – 2.5 Board of Directors Annual report 2022 64 Annual report 2022 65 Per Oluf Solbraa Board Member and Member of the Remuneration Committee Member since March 2021 Background: Per Oluf Solbraa 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 director in the munic- ipality of Nord-Fron and has since 1989 held several positions within the administration 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. Per Oluf Solbraa was born in 1962 and lives in Sør-Fron in Gudbrandsdalen. He represents Gudbrandsdal Energi Holding AS and is person- ally not holding any shares in Fjordkraft Holding 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). Annual report 2022 66 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 Thersa currently holds the position as Head Of Business Development at 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 positions 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 stud- ied Project Management at Oslo University of Applied Science and Management Competence at Board Level at the Norwegian Business School (BI). 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 EFD Induction 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 experience as an executive and direc- tor 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). Part 2 – 2.6 Board of Directors Annual report 2022 67 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. Part 2 – 2.6 Board of Directors Tone Wille Board member and Member of the Remuneration Committee Member since April 2021 Background: Ms. Wille currently and since 2016 holds the position as President and CEO of Posten Norge AS. From 2012-2016 she was CFO in the Posten Group and from 2006-2012 the CFO of the Mail division, Posten Norge AS. Prior to joining Posten she has held senior management positions in Norfund (Norwegian Investment Fund for Developing Countries), Elkem ASA, GE Energy (Norway) AS and the Kværner Group. Ms. Wille was elected as Board Member on the general meeting in 2021. Ms. Wille has broad board experience. She is currently a member of the Board of Directors in Arbeidsgiverforeningen (employers’ asso- ciation) Spekter, and in Skift (“Næringslivets klimaledere”). Previously she has been a Board member in Nordea Bank Norge ASA and Flytoget AS. From 2014 until 2015 she was Deputy Chair of the Board of Evry ASA and Chair of the Audit Committee. Tone Wille has also been a board member of SN Power Invest AS from 2004-2010 and of various Private Equity Fund Management companies partly owned by Norfund. Ms. Wille holds a Master of Science in Economics and Business Administration (siviløkonom) from the Norwegian School of Economics (NHH). She attended the AFF “Solstrand programme” in 2011-2012. Tone Wille was born in 1963 and lives in Oslo. She holds no shares in Fjordkraft Holding ASA. Annual report 2022 68 Marianne Unhjem-Solbjørg Board Member (employee representative) Member since April 2021 Background: Marianne Unhjem-Solbjørg was born in 1973 and lives in Orkanger. She has served as board member of Fjordkraft Holding ASA since 21 April 2021. Ms. Unhjem-Solbjørg has been deputy service manager since 2011 and assistant sales and service manager of Customer Service in Trondheim since 2020. She has been senior Advisor of Customer Service since 2010. Ms. Unhjem-Solbjørg has been with Fjordkraft since 2010 and has worked in Customer Service in Trondheim Energiverk 2001-2010. Ms. Unhjem-Solbjørg’s educational back- ground is upper secondary school with spe- cialization in accounting. Elisabeth Norberg Board Member (employee representative) Member since 14 May 2019 Background: Elisabeth Melheim Norberg was born in 1973 and lives in Nøtterøy. She has served as board member and employee rep- resentative of Fjordkraft Holding ASA/Elmera Group ASA since 14 May 2019. Ms Norberg was employed at Vestfold Kraft Energi in 2000, where she started as a marketing con- sultant and became employed at Fjordkraft when the company was established in 2001. Today she is the leader of digital ecosystem in Elmera Group. Norberg has 19 years of work experience from the electricity retailing industry. During the years in Fjordkraft she has worked as a Webmaster (2001-2012), Digital Adviser (2012-2019) and Head of User Experience (2019). Education: Ms Norberg is an IT Marketing Economist from the Business Academy, specialising in IT projects. She studied in eBusiness at the University of Lund and has certiﬁcation from the Digital Marketing Institute. Part 2 – 2.6 Board of Directors 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, and 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 2022 69 Annual report 2022 70 Part 3 – 3.1 Strategy and strategy planning In our strategy process, we think both in terms of the Group and the individual companies and brands. The Group strategy needs to be ambitious and set the overall direction. Annual report 2022 71 Part 3 – 3.1 Strategy and strategy planning 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. Scenario planning The electricity market is evolving rapidly, in part because of the electriﬁcation of society and adjustments to the framework condi- tions. This clearly underlines the importance of having a comprehensive and well-aligned strategy in place; decisions one takes today could be vital for the value proposition and customer relationships in the future. In such circumstances, conventional strategy plans with a 3-5-year perspective are not always suf- ﬁcient. 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 scenario model, and the scenario ﬂags are evaluated and reported on a quarterly basis. Strategic context The electricity market is highly complex and is inﬂuenced by a number of factors. It is vital that the strategy process is designed to com- prehend 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, in a bid to ease the economic burden on households and busi- nesses as a result of high electricity prices. The Norwegian government launched an electricity support package for households at the end of 2021. The scheme has carried through 2022 and has been prolonged to be in place throughout 2024. Initially, the scheme would provide a deduction of 50 % of the average monthly market rate for electricity which exceeded 87,5 øre kWh. The deduction was later increased to 90 % of the exceeding amount. Additionally, a support scheme for businesses was launched at the end of the third quarter. However, only a small proportion of businesses qualiﬁed for support. In addition to compensating those who suﬀer from increased prices the government decided to demand higher taxes from those who proﬁts from them. Thus, they increased the resource rent tax for hydropower and intro- duced it for onshore wind power. Furthermore, they introduced high-price contribution from wind and hydropower, meaning a tax of 23 % of the part of the price that exceeds 70 øre per kWh. This makes investments in sustainable power generation less proﬁtable and reduce the attractiveness of ﬁnancial contracts for producers. This can reduce the liquidity on the future marked and limit the access to hedging instruments. Regulatory changes From November 1st the Price Disclosure Act entered into force, 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. In a volatile market, combined with the support scheme for households which is calculated based on market price, this increases the risk associated with the variable product drastically. Annual report 2022 72 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 market to increase penetration in Sweden and Finland, both in the consumer and business segment. By introducing proven concepts and solutions we will replicate the success of our Norwegian brands. We are revising our product strategy in the Consumer seg- ment, tailoring it for today’s market conditions. As a risk miti- gating measure, we are reducing complexity and enhancing transparency connected to all our products and services. Cost efﬁciency The market conditions are challenging our margins. To miti- gate these eﬀects we have increased our eﬀorts to become more cost eﬃcient. A cost reduction programme has been initiated aimed at reducing costs by 100 MNOK, as well as continuing our focus on scalability in tech and operating platform solutions. 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 partnership with Telia in Fjordkraft Mobil, establish AllRate as a service prover to the grid companies and by growing Steddi Payments through our electricity retailers. We will develop new revenue streams and build assets by capitalising on our distribution power in new markets. We are increasing our eﬀorts to contribute to more local energy production by taking a bigger role in selling and leasing solar panels. Annual report 2022 73 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 NORWAY The Consumer segment comprises of energy sales to private households across Norway. Fjordkraft, as the largest player, has a nationwide presence and a leading market position in the Norwegian consumer market, and also operates 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 have the most satisﬁed customers in the industry according to EPSI’s latest annual survey and the strongest repu- tation according to Apeland’s traction report. They are also the highest rated company on Bytt.no, Norway’s largest website for compar- ing Consumer products and services, in 2022. Gudbrandsdal Energi 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. Throughout 2022, we have further devel- oped our app and services, to increase stabil- ity, customer value and customer experience. For example, display of hourly prices in the app, clearer display of consumption and costs, optional push notiﬁcation with tomor- row’s spot prices, overview of estimated costs for the coming month and the governments support scheme. As the ﬁrst electricity company in Norway, we also rent pulse meters to our customers and give them access to real-time data about their power consumption. The high electricity prices have led to increased awareness of own consumption. This has resulted in a large increase of app users. We now have close to 80,000 unique users. Analyses show that app users have reduced their consumption by 5 percentage points more than our other customers. On average, app users saved NOK 1,579 more than other GE customers in 2022, in pure reduction of consumption. In addition comes savings from smart charging of electric cars. An analysis of the charging statistics and prices over the past 12 months shows that customers who have used this service, on average reduced their charging costs by approximately 15-20 percent. 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 prod- ucts and services, related to the core product electricity. The customer must be helped by technology and people to use an increasingly complex electricity product in a smarter and more cost-eﬀective way. Fjordkraft Fjordkraft has a leading market posi- tion as a recognized brand, which is proven by various consumer surveys. In the consumer segment Fjordkraft is: • The largest and most well-known electricity retail brand in Norway • Winner of Bearing Point’s Digital Leader award within Energy in 2021 • Oﬀering a broad product range with value added services and an industry-leading loyalty program. We oﬀer an attractive range of products that match varied consumer preferences. In 2022 we relaunched spot with trading at Fjordkraft allowing consumers to capitalise on the Group’s power trading competence. In 2022 this product beat the market each month and has become a popular product particulary among the more conscious consumers. During 2022 we launched cash points in Fjordkraft, giving consumers the opportunity to save up points that can be used to pay their electricity bill or get a discount on products at Fjordkraft’s online Marketplace. We also launched an option that allows consumers to refer friends and acquaintances to Fjordkraft giving both parties 500 cash points. Fjordkraft also oﬀers an attractive beneﬁt program in co-operation with external part- ners, and a wide range of value-added ser- vices including aﬃnity insurance, ﬂexible payment solutions, guarantees of origin, solar panels with sun account, EV home charger and smart charging. Our digital ecosystem has a wide range of apps and websites serving speciﬁc roles and solving speciﬁc tasks for our customers. This includes the Fjordkraft-app, fjordkraft.no, My Page, The Fjordkraft Marketplace and the EV charging app. In 2022 we relaunched My Page on a new platform, providing the con- sumer with a better user experience. We also launched the TrøndelagKraft-app giving the regional brand a better ecosystem and com- petitive advantage in the region. The app, regardless of brand, allows cus- tomers to move in and out of the diﬀerent interfaces to solve their tasks, whether they want to view their monthly beneﬁts, check their electricity usage, buy products from the marketplace, ﬁnd their invoices or check sta- tus of their EV-charging. In 2022 the Fjordkraft and TrøndelagKraft app in total had close to 450.000 unique users, and the high electricity prices in combina- tion with relevant app-content have been a catalyst for record high user adoption. The app has a positive impact on both churn and customer satisfaction, as insights from our analytics shows that customers using the app have a signiﬁcantly lower churn rate. We are always looking for services that eliminates customer frictions and add cus- tomer value through innovation and smart technology. During 2022 we have focused on increasing the stability of the app to ensure great user experience. In addition, we have launched new optional push notiﬁcations to help consumers be aware of spot prices during the day and night in a highly volatile market. Furthermore, we gave consumers the chance to track their estimated cost for the current month. This increases aware- Annual report 2022 74 Part 3 – 3.1 Strategy and strategy planning ness of the cost, which in turn, encourages the consumer to take measures regarding their electricity consumption. With high elec- tricity prices this has turned out to be one of the most used functions among users in 2022. Based on customer feedback we also became one of the ﬁrst companies to imple- ment an option to show the electricity cost including the governments support scheme. All of this comes on top of existing services that give our consumers access to a quick and easy overview of electricity consumption, solar energy production, mobile data usage, consumer beneﬁts, and smart and easy-to- use services for overview and control of the charging of electrical vehicles. Most new EV brands and EV chargers are connected to our smart charging services. To help consumers get even more insight in their electricity habits and help them save energy and electricity costs, we oﬀer the Fjordkraft Pulse via Fjordkraft Marketplace. This unit can be connected into the smart meter in the house and give real time data of their electricity usage straight into the Fjordkraft or TrøndelagKraft app. More services will follow, and these services 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 new cus- tomer demands appear. The Fjordkraft Marketplace was launched early 2021 and is based upon a platform busi- ness model. We are oﬀering quality goods from quality 3rd part vendors. We have cre- ated 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 Fjordkraft app. The demand for household appliances and gadgets that can be connected and controlled has increased along with the adoption of IOT in the consum- ers’ homes. In 2022 we have ensured that the products oﬀered through the marketplace will be products that complement and strengthen our core value proposition. This can be mobile phones, solar panels, home chargers and smart products for home and travel. The continuing plan is that Fjordkraft Marketplace will give Fjordkraft new reve- nue streams and reduce customer churn. An example of a new revenue stream can be commission per order sold on the market- place. Financing solutions, instead of cash settlement, have a proven record of reducing customer churn and are of course an avail- able service through our ﬁnancial partners. Business segment Elmera Group Business operates the brands Fjordkraft and Gudbrandsdal Energi in Norway and Nordic Green Energy in Sweden and Finland. We have a strong position in the business segment 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. There are approximately 20 Norwegian players working on a national scale in total. 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 contributes 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 Sweden and Finland through Nordic Green Energy, we are well positioned to increase our B2B market position in the Nordics. Business customers have a higher con- sumption and more complex products to which the customers are willing to pay for. Therefore, we have a higher net revenue per delivery compared to the Consumer segment. Our Portfolio is highly diversiﬁed. We recog- nize that diﬀerent customers need diﬀerent solutions, and we are targeting speciﬁc seg- ments of the market with a wide range of prod- ucts designed to meet their needs. Our main product is Spot including Risk Management. Many business customers have a great need for predictable power costs, therefore they choose electricity plans that include risk management. We experi- ence a higher loyalty and satisfaction from the customers 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 products, because the customers fully own their positions. In 2022, we introduced these products in GE and Nordic Green Energy. 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, compari- son of consumption with temperature, cost reports, price forecasts and risk management reports. We also oﬀer our customers a Climate reporting tool that uses the Greenhouse Gas Protocol Standard. We oﬀer local “energy as a service” - solu- tions in the form of solar panels and heat pumps, giving our customers the possibility to implement sustainable energy solutions without the need of a major capital investment. In our portfolio of “climate smart”-products, we also oﬀer systems for energy optimal- ization in buildings, charging for electrical cars and solar panels for sale. In late 2022, we launched a new beta-project, using sec- ond-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 Annual report 2022 75 positioned for further growth in the business segment! Nordics Through the acquisition of Switch Nordic Green AB in 2020, Elmera Group entered the Swedish and Finnish markets through the Nordic Green Energy brand. We are a challenger in these markets with growth ambitions in both Sweden and Finland. Due to the recent energy crisis, both markets have changed fundamentally. Especially Finland, where previous dominating ﬁxed price prod- ucts are no longer oﬀered at competitive rates due to the risk carried by the electric- ity retailer. Nordic Green Energy stopped selling ﬁxed price products early 2022, and recently most others have decided to follow. Instead spot based products are now oﬀered. Nordic Green Energy is launching the Elmera Group app and several digital services on March 1st, 2023. Nordic Green is therefore well positioned to grow organically in the Finnish market building on the Elmera Group technological advantages. In Sweden, we are well positioned for further M&A-growth and we are targeting regional publicly owned energy companies where electricity retailing is no longer considered core business. In Sweden, as opposed to Finland, there are acquisition targets without ﬁxed price port- folios and thus a more attractive risk proﬁle. The Elmera Group technological platform and digital services are a good match for Swedish retail operations, and may, for some, even be a prerequisite for continuous success in the Swedish market. Elmera Group’s relative technological advantage is still signiﬁcant and is our opportunity to add value to possible acquisition targets. NGI – New Growth Initiatives The NGI segment consists of our mobile ser- vice oﬀering, the Extended Alliance concept, AllRate AS, and Steddi Payment AS. We are a mobile service provider to con- sumers across Norway. Our mobile sub- scription oﬀering includes favourable prices for any customer that also holds a Fjordkraft electricity subscription. The favourable prices apply to the whole household. We see that the customers also holding a Fjordkraft mobile subscription, have a signiﬁcantly lower churn rate and a higher customer satisfaction rate. Fjordkraft have made a massive impact in the mobile market, having grown to become the largest service provider. We oﬀer highly attractive and competitive prices, we have an award-winning customer service, and we oﬀer mobile phones through the Marketplace. At the end of 2022 we announced that Fjordkraft Mobil will continue as a subsidiary of Fjordkraft AS, co-owned by Telia AS. This partnership allows for more cost-eﬀective operations and further development oﬀerings and services. At the end of the year the customer portfo- lio comprised around 143.000 customers. Additionally, Gudbrandsdal Energi operates Gudbrandsdal Energi Mobil. Our Extended Alliance concept oﬀers oper- ating services within message exchange, account settlement, invoicing and payment collection for alliance partners, capitalising on economies 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. AllRate AS are expending their technology platform by developing services for distribu- tion 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 agreed to function as pilot-customers. Furthermore, AllRate have signed agreements with other suppliers nec- essary to complete the service oﬀering to DNOs. AllRate AS will be fully focused on oﬀering their services and expand their pres- ence in the SME segment for DNOs, awaiting completion of the pilot phase. 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- 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. Predictable payment plans are currently oﬀered in cooperation with electricity retailers in the Elmera Group, oﬀering a diﬀerentiating value proposition. In 2023 Steddi expects to launch several news in the market, aimed at reducing the frictions and negative surprises customers experience regarding electricity costs. How do we find new sources of growth? Customer pains are often a good starting point when looking for new opportunities and solving customer pains is at the centre of our innovation agenda. We want to build an attrac- tive ecosystem of products and services that are solving customer problems that together are adding more value to our customers and thereby increasing the customer loyalty. Identifying opportunities that are commer- cially viable and can be developed into value adding products and services is key when it comes to ﬁnding new sources of growth. In a world where digitalisation is accelerating and the 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 own internal knowledge, sources and resources for innovation, we also actively look for potential collaboration partners outside the group that can help us in identifying and developing new growth areas. When it comes to investing, we are willing and able to invest in promising ideas and start-ups that ﬁt into our ecosystem and Part 3 – 3.1 Strategy and strategy planning Annual report 2022 76 strengthen our customer oﬀerings. We have also made successful spinoﬀs from within the Group in the past few years through Metzum AS, AllRate AS and Betalservice AS. Corporate governance and ESG Fjordkraft is a multinational group consisting of several electricity retailers in the Nordic countries of Norway, Sweden, and Finland. To manage these new parts of our organisation well, we are continuously developing our gov- ernance model and IT-infrastructure design. This will secure us leveraging synergies and further achieve economies of scale across our group, while ensuring that these companies continue to understand the uniqueness of their local markets. Thus, we will have a scalable foundation 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 and require- ments are identiﬁed and analysed, and the implications of these provides important guid- ing for the upcoming strategy period. Since 2020, the company has reported on sustain- ability indicators in accordance with the GRI standard in the ESG report. For the ﬁnancial year 2021, GRI reporting has been reviewed by the auditing ﬁrm Deloitte in accordance with the requirements for auditor-approved reporting. The Group closely monitors developments within existing ESG standards and reporting requirements. We also aim to anticipate new standards and understand the consequence of these as early as possible in order to assess the impact and prepare the organisation. To learn more about our ESG work and reporting, please view the ESG section. Part 3 – 3.1 Strategy and strategy planning 4.1 Board of Directors’ Report Both internationally and in Norway, 2022 was a year affected by the energy crisis, high electricity prices and great volatility. Energy supply and electricity prices were on most people’s agenda this year. The Group achieved an operating proﬁt (EBIT adjusted) of NOK 460 million in 2022. The equivalent ﬁgure for 2021 was NOK 610 million. A decline in volume as a consequence of electricity savings and high volatility in the wholesale market characterise the comparison with previous years’ results. Extremely high electricity prices resulted in extraordinarily high ﬁnancing costs for electricity purchases, which affects the Group’s reported proﬁt before tax. Elmera Group ASA and Group Part 4 Part 4 – 4.1 Board of Directors’ Report Annual report 2022 77 Annual report 2022 78 Summary of the ﬁgures for 2022 Net revenue adjusted amounted to NOK 1.711 billion in 2022, and EBIT adjusted to NOK 460million, down from NOK 610 million in 2021. Number of deliveries amounted to 954,000 electricity deliveries at year-end 2022, 975,000 at year-end 2021, and volume sold amounted to 17.5 TWh, down from 20.2 TWh in 2021. The ﬁnancial statements for 2022 were prepared in accordance with the IFRS accounting standards. The Group’s overall operations At the Annual General Meeting in 2022, it was decided to change the company’s name from Fjordkraft Holding ASA to Elmera Group ASA. The reason for the change was to avoid confu- sion with the subsidiary and electricity retailer Fjordkraft AS. Elmera Group ASA is the listed parent company in a Group consisting of several companies that sell advisory services and other services, software for energy compa- nies, electricity agreements and products for the low-emission society, as well as mobile telephony. 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. The Group comprises four electricity retailers: Fjordkraft AS which is Norway’s largest and best-known electricity retailer. Gudbrandsdal Energi has had for a num- ber of years Norway’s most satisﬁed elec- tricity customers. TrøndelagKraft AS which is the local electricity retailer in Trondheim, and Switch Nordic Green AB which oper- ates in Finland and Sweden, with the Nordic Green Energy brand.The subsidiary Elmera Industrial Ownership AS owns AllRate AS, Steddi Payments AS, Elmera Nordic AS, Gudbrandsdal Energi AS, Energismart Norway AS and also 40 per cent of the soft- ware company Metzum AS. In 2022, 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, sales from solar panels, settlement 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. Standardised mes- sage exchange interfaces enable all market participants to deal with a single player. Elhub is an important prerequisite for managing the huge volumes of data resulting from the intro- duction of digital electricity meters (AMS). Denmark has implemented Datahub. In Finland, Datahub was introduced on 21 February 2022. In Sweden, the work on a Datahub has been postponed indeﬁnitely due to a lack of decision on regulatory adjust- ments by the Swedish Riksdag (Parliament). Great variation in area prices and hourly rates 2022 was marked by war and energy crisis in Europe. This resulted in soaring gas and electricity prices, as well as increased price volatility, with great variation in prices throughout the day/night and between the diﬀerent price areas. Electricity prices were also high in 2021. This was due to the tran- sition to more renewable energy sources, international energy market conditions related to gas prices and carbon emission allowances, a new North Sea cable between Norway and the UK and low reservoir ﬁlling in Norwegian and Swedish reservoirs. Wind power and hydroelectric power generation in the Nordic region are signiﬁcantly aﬀected by weather conditions, temperature, con- sumption, prices of other energy carriers and macroeconomic conditions. In 2022 and 2021, market prices for elec- tricity were extremely high, while in 2020 they were exceptionally low. The average price on the Nordic power exchange was 137.3 øre/kWh for 2022, compared to 63.39 øre/ kWh for 2021 and11.56 øre/hWh for 2020. The system price is a theoretically calcu- lated average price for the Nordic and Baltic countries. The countries in this region are geographically divided into diﬀerent electric- ity price areas, and area prices may deviate signiﬁcantly from the system price, depend- ing on transmission capacity, and production and consumption within the price area. The most expensive months in Norway (NO2), Sweden (SE3 and SE4) and Finland were August, September and December. Part 4 – 4.1 Board of Directors’ Report Annual report 2022 79 56 per cent of the Norwegian population men- tioned Fjordkraft unprompted when asked to name an electricity retailer. Gudbrandsdal Energi came in fourth place among elec- tricity retailers, with 16 per cent unprompted awareness. TrøndelagKraft is a local supplier and is mentioned by 1 per cent of customers nationwide. The survey conducted in October/November 2022 by EPSI measured customer satisfaction with their own company among the Norwegian electricity customers of the eight largest elec- tricity retailers. Gudbrandsdal Energi had Norway’s most satisﬁed electricity custom- ers and scored highest in the survey, with 75 points. This was an improvement of 2.6 points from the previous year. Fjordkraft scored 65.8 points, an increase of 6.9 points from the pre- vious year. This placed Fjordkraft as number 6 out of 8 suppliers measured. Surveys of meas- ures implemented for Fjordkraft’s customers in the autumn of 2022 show that these measures have been noted by customers. The electricity retailers in the Group are continuously working on various measures to improve the customer experience and our reputation. This is related to customer com- munication, power agreements and products, as well as the development of new services in the app. The Trygg Strømhandel certification scheme In 2021, the industry associations Energi Norge and DistriktsEnergi introduced a volun- tary certiﬁcation scheme for electricity retail- ers. The certiﬁcation scheme is called Trygg Strømhandel. Elmera Group has been a driv- ing force behind the scheme and the Group’s three end-user companies in Norway were among the ﬁrst to be certiﬁed. The scheme sets a number of requirements concerning the sale of electricity, and for information and transparency in products and customer com- munication. The scheme includes deviation reporting processes, to stimulate continuous improvement. The recertiﬁcation process under the aus- pices of the DNV accreditation company will take place in the summer of 2023. The Group has appointed a compliance oﬃcer with ongo- ing responsibility for monitoring internal fol- low-up of the certiﬁcation requirements. Customers keep track via the app At the end of 2022, more than 400,000 of the Group’s electricity customers in the Norwegian consumer market had started using the app to check 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 creates awareness of customers’ own electricity consumption and provides the knowledge customers need to be able to adjust their consumption. The aim is to further increase the number of users. The Group’s Norwegian electricity customers can check their own electricity consumption compared to the current temperature, monitor production from solar panels on their own roof, control the heat pump, use their customer ben- eﬁts, check outdoor temperature, keep track of invoices, receive power saving tips, check their climate footprint and order additional ser- ﬁgures are not temperature-adjusted and do not take account of the increasing number of electric cars and home charging of cars. The ﬁgures for 2022 show the greatest downturn in consumption in the regions with the highest area prices in the power market. In Central and Northern Norway, households cut con- sumption by 4.5 per cent, while for the three southern Norwegian price areas (NO1, NO2 and NO5) electricity consumption in 2022 was reduced by 16.4 per cent compared to the previous year. Electricity price affects reputation and satisfaction The price paid by the customer for electricity is the primary factor determining consum- ers’ view of the industry, according to Kantar. When electricity prices rise, the players’ rep- utations suﬀer, and they improve again when electricity prices are low. The electricity industry’s reputation score is low and amounted to 34 points at the end of 2022, compared to 33 points at the end of 2021, according to Kantar’s Energy Barometer for Q4 2022. The industry’s lowest measured score was 30 points in 2006. The record-high electricity prices and the Norwegian government’s payment of an elec- tricity subsidy to households via their electric- ity bills brought a huge increase in the number of enquiries to all companies’ customer ser- vice centres. Fjordkraft is the best-known electricity retailer. According to Kantar’s survey for Q4 2022, no less than 93 per cent of the adult population in Norway had heard of Fjordkraft. Historically, there have been small diﬀer- ences between the prices in the diﬀerent electricity price areas within each country, and normally only for short periods. The price variations between the areas in 2022 were enormous and persisted for prolonged peri- ods. There were also long periods with very large intraday price variations. In August, Finland experienced extreme intraday variations in spot prices for electric- ity. On 8 August, the cheapest hour cost 79.5 øre and later that day the rate was 856 øre/ kWh. The highest hourly rate in Norway (NO2) in 2022 was on 29 August, at a rate of 822 øre/kWh. The business areas Consumer market – Norway In the many years of low electricity prices, for most consumers in Norway power agree- ments and power consumption were a low-in- terest product. This situation has changed as a consequence of the increased awareness of the international energy market and the high electricity prices in 2022. The total consumption of electricity in Norway in 2022 amounted to 134 TWh. In overall terms, this is a decrease of 4 per cent compared to 2021. Total consumption by Norwegian households was 35 TWh in 2022, which is the lowest level since 2014, accord- ing to ﬁgures from Elhub. Norwegian house- holds reduced their consumption by 13.1 per cent in total in 2022, compared to 2021. The Part 4 – 4.1 Board of Directors’ Report Annual report 2022 80 management agreements to reduce the eﬀect of price ﬂuctuations in the wholesale market by ﬁnancially hedging a share of the volume. As a consequence of the extraordinarily high prices, customers achieved savings totalling more than NOK 1 billion compared to trading continuously in the spot market. A customer survey conducted by EPSI in the autumn of 2022 shows a result of 60.8 points, which is an increase of 1.9 points from the previous year. The industry average is 62.4 points and the company’s goal is to continue its eﬀorts to increase the satisfaction rate. Financial instruments and fixed-price agreements In 2023, the Norwegian government has changed the tax calculation model for power production to provide an incentive for large power producers to oﬀer ﬁxed-price agree- ments to business customers who so require. 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. A high proportion of the Group’s business customers have electricity risk management agreements that reduce the exposure to price ﬂuctuations by ensuring that some elements of the company’s consumption volume are ﬁnancially hedged via the Group’s manage- ment products. The ﬁnancial power exchange, Nasdaq, provides electricity retailers and cus- tomers with the instruments to be able to oﬀer this. The producers oﬀer ﬁxed-price agreements on market terms. So far, there has been little interest in these agreements. Very few have wished to enter a long-term commitment while prices are running high, and a lot of busi- nesses already have electricity agreements with ﬁnancial price hedging to dampen ﬂuc- tuations in electricity prices. Nordic Switch Nordic Green AB Switch Nordic Green AB sells renewable energy and electricity contracts with guar- antees 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 customers. At year-end, Switch Nordic Green had 149,000 electricity deliveries in total for Sweden and Finland. The other Nordic countries diﬀer signiﬁcantly from the Norwegian electricity market in terms of the type of electricity agreements chosen by personal customers. In the Norwegian market in general, only 4 per cent of households have ﬁxed-price agreements for electricity supplies and 74 per cent have spot price agreements. In Denmark, Finland and Sweden, spot price agreements account for 43 per cent, 8 per cent and 50 per cent, respectively. (Source: NordEnergi/EnergiNorge). Proﬁle risk from NGE’s ﬁxed price portfo- lio is reduced into 2023, due to sales stop of ﬁxed price contracts with proﬁle risk from January 2022. The market is moving towards spot-based products. New growth initiatives Kraftalliansen (the Power Alliance): Services for other electricity companies One of the Group’s business areas is the operation of an alliance concept consisting of 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 concept operates under the brand name of ‘Kraftalliansen’. The potential for future growth in service sales is assessed to be very good, both within and outside Norway. AllRate AS AllRate AS has energy companies in the Nordic region as its customer groups and oﬀers service deliveries to electricity, broad- band and district heating providers, as well as solutions for power grid companies. The service delivery handles every process, including metering, settlement, billing, pay- ment collection and message exchange with Elhub. Other market-oriented digital services and solutions, such as mobile app, are also oﬀered. The platform is scalable, with the capacity to handle higher transaction volumes resulting from acquisitions, so as to support the company’s consolidation ambitions. vices. For Fjordkraft’s customers, the same app provides an overview of their own mobile phone use, enables them to order additional services and also provides an overview of their children’s mobile data use. New features in the app are released regularly. Payment solutions for customers Continuous eﬀorts are being made to develop eﬀective payment solutions for customers and to meet customers’ needs due to the great variations in households’ electricity costs. The services are oﬀered to electricity customers through the subsidiary Steddi Payments AS. Business market – Norway Like the consumer market, the business market for power agreements and portfolio management of electricity is fragmented, with many providers. Fjordkraft’s business customers range in size from major Groups and energy-intensive enterprises to small and medium-sized local production and service companies. The Group’s electricity retail- ers have a wide distribution network thanks to a presence and sales oﬃces in Bergen, Hamar, Oslo, Sandefjord, Sortland, Stavanger, Trondheim and Vinstra. 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. In 2022, around 75 per cent of the Group’s Norwegian business customers had risk Part 4 – 4.1 Board of Directors’ Report Annual report 2022 81 Steddi Payment AS This is a newly established venture in Elmera Group that specialises in services related to payments to electricity retailers and to the consumer segment. In a rapidly changing electricity market, new customer needs arise in both customer segments. Consumers’ incomes are generally the same every month, but electricity customers’ bills vary widely between the summer and winter months. The company oﬀers payment services that improve how customers experience electricity retailers and ensure customers better man- agement of their ﬁnances when they can pay a predictable amount each month. In 2022, Steddi Payments operated under the name of Betalservice AS. Mobile service company established On 23 December 2022, it was announced that Fjordkraft AS and Telia Norge AS would join forces to establish and own Fjordkraft Mobil AS. Fjordkraft AS will own 61 per cent and Telia Norge 39 per cent of the company. Fjordkraft AS started its mobile activity in 2017 as part of the business in the power sales company and the company will continue to provide services and handle customer service for Fjordkraft Mobil AS. Fjordkraft Mobil AS is the largest mobile telephony provider without its own telecommunications network. The cooperation with Telia Norge will boost the competitiveness of the largest independ- ent mobile operator in Norway, and will be good for all Norwegian mobile customers. PPA for solar business The group oﬀers solutions for locally pro- ducing energy through solar production for both the private and business segments. In the corporate market, PPAs (Power Purchase Agreements) are oﬀered for solar cell production and heat pump technology. 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/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, ﬁnancing and operation. Organisation Employees The Group has undergone a major reorgani- sation since August 2022. The purpose of the reorganisation was to achieve a clear Group structure for the companies included. Another aim was to streamline Fjordkraft’s core activi- ties in order to facilitate cost eﬃciency meas- ures. Fjordkraft has the necessary support functions, and the company also sells ‘larg- est user’ services to other companies in the Group. The Business area is a separate proﬁt and loss unit in the Group. Fjordkraft’s business customers are ﬁnancially consolidated into Fjordkraft AS. As a consequence of the organisational change, the Business area holds matrix responsibility for all sales in the Group’s business segment, including the Nordic region. As part of the reorganisation, several oper- ations, IT and staﬀ functions which previously were organised in Fjordkraft AS, have been transferred to Elmera Group ASA. This transfer was carried out in August 2022 as a transfer of business (“virksomhetsoverdragelse”), and included the transfer of 81 employees. In overall terms, the Elmera Group’s whol- ly-owned companies, including operations in Sweden and Finland, had a total of 440 permanent employees at the end of 2022, equivalent to 412 FTEs. In Norway, there were 372 permanent employees in total at the end of 2022, equivalent to 367.1 FTEs. At the end of 2022, the parent company Elmera Group ASA had a total of 89 employees and 88 FTEs. At the end of 2022, the Group had a total of 86.91 FTEs covered by staﬀ contracted from manpower agencies. Hiring from a manpower agency took place mainly to cover a tempo- rary need and to provide extra capacity 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 total absence due to illness for the Group’s Norwegian companies was 8.2 per cent in 2022, compared to 5.9 per cent in 2021. The reason for the change from the pre- vious year is increased long-term absence, as well as high short-term absence in February 2022. Elmera Group ASA and Fjordkraft AS have signed up to the ‘Inclusive Working Life’ scheme. In 2022, an employee survey was conducted to investigate how employ- ees experienced their work situation and the extent to which they identiﬁed with the company’s goals and values. The survey was conducted in March 2022 and showed that employee satisfaction is very high and that employees have a strong commitment to their workplace. As from the spring of 2022, fears of exten- sive Covid-19 infection subsided and the special workplace measures were lifted Absenteeism was high at the start of the year and was generally higher throughout the year than in previous years. The general experi- ence is that after conditions were normalised, absence as a consequence of other infection or illness was higher than at the time when everyone stayed at home due to Covid-19. Equal opportunities The purpose of the Norwegian Anti- Discrimination Act is to promote equality, ensure equal opportunities and rights, and prevent discrimination. At Elmera, 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 encompass recruitment, pay and working Part 4 – 4.1 Board of Directors’ Report Annual report 2022 82 conditions, promotion, development oppor- tunities and protection against discrimination or harassment. A full statement on gender equality is part of this Annual Report, ESG section. The ratio for shareholder-elected Board members is 60 per cent women and 40 per cent men. When employee-elected members are included, the proportion of women on the Board totals 62.5 per cent. Furthermore, the Group’s objective is for the ratio of female/ male managers to be equivalent to the ratio for the general distribution of women and men among the employees. Elmera’s Group man- agement team has a total of nine members and the distribution between women and men is 22 and 78 per cent, respectively. The distri- bution between women and men employed by the company is 30 per cent and 70 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 50 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 of Directors held a total of nine meetings during the year. In addition, three 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 com- mittee. In March 2022, the Board conducted an evaluation 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 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 2022, an executive remuneration report was prepared for submission to the general meeting. The report is available on the com- pany’s website: www.elmeragroup.no Strategy The Group’s strategy plan for the 2023-2025 strategy period was updated during the year. The strategy work in 2022 was adapted to the increase in the number of companies in the Group and to ensuring synergies in the Group. Elmera Group ASA’s tasks and role as parent company were also clariﬁed. 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’s strategy process is related to the Group’s management philosophy, ensuring that the strategy work is not the exclusive concern of the company’s execu- tive management. 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. Since 2004, promise-based management has been an important element of the company’s culture and working meth- ods 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. In connection with the name change, the stock ticker was changed from FKRFT to ELMRA. The share price (FKRFT) fell by 66 per cent in the period from 1 January to 31 December 2022. The main index of the Oslo Stock Exchange fell by 1 per cent in the same period. The company’s market capital- isation at year-end exceeded NOK 1.8 billion. The company had around 9,800 sharehold- ers at the close of the year. A list of the com- pany’s 20 largest shareholders is available at www.elmeragroup.no In 2022, the company operated its inves- tor relations activities in line with the strategy adopted for the area. Part 4 – 4.1 Board of Directors’ Report Annual report 2022 83 CSR/ESG The company presented its ﬁrst ESG Report in 2019. 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 report- ing. Since 2021, the GRI reporting has been reviewed by the Group’s auditor, Deloitte. See the ESG Report, which is included as a sep- arate element of this Annual Report. It also includes climate risk and greenhouse gas accounting. Report on gender equality and equal opportunities, see elmera.no. 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. Elmera Group and the Group have low greenhouse gas emissions as a consequence of the companies’ activities. Targets for further reductions have been set. 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 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 that are in the order of 100 times greater than it could achieve by just cutting its own emis- sions. Via the ‘Klimanjaro initiative’, the Group uses its purchasing power to set requirements for permanent contractual partners. In autumn 2022, the requirement for suppliers to be cli- mate neutral to be able to deliver goods and services was changed to a requirement to be climate committed. This is a consequence of a change in the UN’s methodology, and a change in the UN’s deﬁnition of climate neutral as a concept. This is described in the ESG Report. Suppliers must prepare greenhouse gas accounts, take measures and oﬀset their residual emissions. Greenhouse gas accounts Greenhouse gas accounts for 2022 have been prepared for the Group and for the compa- nies comprising Fjordkraft, 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 produc- tion processes or premises. The business does not cause emissions to the air or water beyond what is consumed by the compa- ny’s employees’ use of the oﬃces and travel related to their work. Electricity consumed in the company’s premises has guarantees of origin (GoOs) from hydroelectric power. This is described in the ESG chapter of the Annual Report, Greenhouse Gas Accounts. tions, and ensure access to information for the general public. The Act imposes a disclosure obligation on companies in Norway and a duty to undertake due diligence assessment of suppliers. The company has published its ﬁrst due diligence assessment in accordance with the Act. The company satisﬁes the requirements of the ILO’s eight core conventions regarding the right to organise, prohibitions against dis- crimination and forced labour, prohibitions against child labour, as well as provisions for preventing corruption, and requires the com- pany’s suppliers to do the same. The Group’s ethical guidelines include a duty to notify employees of any censurable conditions, including breaches of internal guidelines, and statutory and regulatory pro- visions, and procedures for how such infor- mation is to be provided. Elmera Group’s Corporate Governance Report is part of the company’s Annual Report for 2022. The report is prepared to describe all elements of the Norwegian Code of Practice for Corporate Governance. Climate risk assessment Elmera Group undertakes climate risk assess- ment as part of the overall risk management and reporting in the Group. The company works with the introduction of the increased 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 the Climate Risk chapter in the ESG Report. Ethics and compliance As from 1 July 2022, the Transparency Act entered into force in Norway. The Act will promote businesses’ respect for fundamen- tal human rights and decent working condi- Part 4 – 4.1 Board of Directors’ Report Tonnes CO2E 2022 Scope 1 10,7 Scope 2 0 Scope 3 263,5 Total 274,2 Total compensations 274,2 Emmisions after compensations/ allowances 0 Annual report 2022 84 Finances Adjusted operating proﬁt (EBIT adj.) amounted to NOK 460 million in 2022, a decrease from NOK 610 million in 2021. The Consumer seg- ment was negatively impacted by signiﬁcant product migration from variable contracts to spot contracts in the fourth quarter of 2022. In combination with highly volatile elspot prices, this was the main driver for the reduction in adjusted operating proﬁt in the segment from 2021 to 2022. The Business segment contin- ues the strong growth from previous years and delivered an all-time high operating proﬁt in 2022. The demand for risk mitigating products and advisory services has further increased with the high elspot price level, providing the segment with a strong pipeline of potential new customers into 2023. The Nordic seg- ment generated a negative adjusted operating proﬁt in 2022, driven by proﬁle costs on ﬁxed price contracts. The associated contracts are phased out and the residual proﬁle risk is reduced into 2023. New Growth Initiatives improved versus 2021 and delivered positive adjusted operating proﬁt in 2022. There are several factors that are expected to have a positive impact on the segment as we head into 2023, like the cooperation with Telia on the Group’s mobile oﬀering and the increased demand for the Group’s solar panel solutions. The operating proﬁt in 2022 was NOK 273 million (2021: NOK 408 million). Proﬁt for the year was 74 million (2021: 257 million). 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, 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) and the interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS. The consolidated ﬁnancial statements also comply 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 ﬁgures for 2021 have been restated. The restatements include adjustments to the recognition of estimated revenues from the sale of power, which did not to an adequate degree reﬂect all available information at the time of reporting. The fair value measure- ment of derivative customer contracts has also been adjusted in accordance with IFRS 9, resulting in restatements of prior period revenue and fair value of derivative ﬁnancial instruments. Restatements have also been made to prior period direct cost of sales and onerous contract provisions. All adjustments have been detailed in note 3 to the ﬁnancial statements. The interest compensation for extended credit days related to electricity purchase from Statkraft Energi AS, the Group’s main supplier of electrical power, has in previous annual reports been recorded in Direct cost of sales. In this report and going forward the interest compensation is reported in Interest expense. Comparative ﬁgures have been reclassiﬁed to align with current presentation. The Group’s total revenues in 2022 amounted to NOK 25,522 million, compared to NOK 15,075 million in 2021 and direct cost of sales amounted to NOK 23,824 million in 2022 compared to NOK 13,357 million in 2021. The signiﬁcantly higher elspot prices is the main reason for higher total revenues and direct cost of sales in 2022. Total personnel and other operating expenses amounted to NOK 996 million, compared to NOK 898 million the previous year. The Group’s proﬁt before tax was NOK 129 million (2021: NOK 335 million). Tax expenses was NOK 55 million (2021: NOK 78 million). Proﬁt after tax for 2022 was NOK 74 million (2021: NOK 257 million). The 2022 operating revenue (NOK 86 mil- lion) and operating expenses (NOK 132 mil- lion) of the parent company Elmera Group ASA are signiﬁcantly increased compared to 2021 (Revenue: NOK 3 million, Operating expenses: NOK 22 million). This is a con- sequence of the Group’s reorganisation in August 2022 which is described in the “Organisation”-section above. The 2022 oper- ating revenue in Elmera Group ASA 2022 are revenues from providing management-, IT, and other support services to group companies. The parent company’s proﬁt before tax was NOK 124 million (2021: NOK 388 million). Tax expenses was NOK 11 million (2021: NOK 6 million). Proﬁt after tax for 2022 was NOK 112 million (2021: NOK 382 million). The decrease in proﬁt is primarily due to a decrease in div- idends from subsidiary Fjordkraft AS which is recognised as Income from investments in subsidiaries. Allocation of the year’s proﬁt As per IFRS accounting rules, the IFRS ﬁnan- cial statements for 2022 show no provisions for dividends on 31 December 2022. The board has proposed a dividend of NOK 1.50 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 70 per cent of the Group’s total assets, while non-current assets correspond to 30 per cent. Due to variations in price and consumption, the value of total assets varies signiﬁcantly from period to period. Total assets have increased with NOK 4 255 million in 2022, mainly due to an increase in trade receivables and derivative ﬁnancial instruments. In 2022, equity has decreased by NOK 434 million from NOK 1,674 million to NOK 1,240 million. The Group’s equity ratio has decreased from 17 per cent on 31 December 2021 to 9 per cent Part 4 – 4.1 Board of Directors’ Report Annual report 2022 85 on 31 December 2022. Total current liabilities have increased by NOK 3,101 million from 2021. This is largely related to increased trade and other payables, onerous contract provi- sion and derivative ﬁnancial instruments. Total non-current liabilities have increased by NOK 1,588 million. The main reasons are a NOK 1,252 million increase in derivative ﬁnancial instruments and a NOK 447 million increase in onerous contract provisions. In 2022, Elmera Group ASA total assets have increased with NOK 370 million, mainly due to an increase 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 con- nected to the group’s Overdraft facility which have increased with NOK 534 million in 2022. Compared to 2021, Interest-bearing long- term debt has decreased with NOK 43 mil- lion, liabilities to related party has increased with NOK 111 million, and Interest-bearing short term debt has increased as the com- pany drew NOK 125 million on the revolv- ing credit facility in 2022 to ﬁnance a share buyback program. Elmera Group ASA equity has decreased with NOK 174 million, and the equity ratio has decreased from 57 per cent on 31 December 2021 to 46 per cent on 31 December 2022. Key ﬁgures In total, the Group had 1,041 electricity deliv- eries at year-end 2022. This is a decrease of 20 thousand electricity deliveries from 2021. The number of mobile subscribes in Part 4 – 4.1 Board of Directors’ Report the Group was 144 thousand. There has been a 14 % decrease in total volume delivered to the Consumer and Business segments, from 16.96 TWh in 2021 to 14.63 TWh in 2022. The Nordic segment delivered 2.88 TWh in 2022. ROE (Return on equity) was 5 per cent in 2022, compared to 14 per cent in 2021. 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 decreased from NOK 379 million in 2021 to NOK -370 million in 2022. The decrease is mainly driven by change in trade receivables and trade pay- ables. Net cash used in investing activities was NOK 24 million in 2022 compared to 113 million in 2021. 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: • Market risk • Credit risk • Liquidity risk 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. The electricity prices are aﬀected by the war in Ukraine and the transition to a low-emis- sion society. The EU’s climate targets and the phasing-out of fossil energy production, as well as a focus on renewable energy with a signiﬁcant wind power element, have made the European power market increas- ingly dependent on prevailing weather con- ditions. In a transition phase, and for as long as the war continues, higher power prices and greater ﬂuctuations than normal are expected. 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 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 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 (increased from 14 days in 2022). In the business segment the notice period is seven days. Volume sold on variable price products in the consumer segment decreased towards the end of 2022 as signiﬁcant numbers of customers migrated from variable to spot-priced products. The Group initiated sales stop of these contracts in the consumer segment and year-end 2022 this contract type represents less than 11% of the customers in the segment. A substantial 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 movement Annual report 2022 86 towards spot based products for new custom- ers. At the beginning of the year the majority of the 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 have been signiﬁcantly decreased in 2022, and will continue to decrease in 2023 and going forward as old ﬁxed price contracts expire. 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 2022, 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 number 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 cus- tomer’s credit quality before accepting any new customer. The Group uses publicly avail- able 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 custom- ers 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, in 2022 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 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 Part 4 – 4.1 Board of Directors’ Report Annual report 2022 87 (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 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 30-day payment term in Norway and 45-day payment term in Sweden and Finland. In addition, this agreement in Norway includes a right for the Group to postpone these payments for addi- tional 30 days if current cash in hand does not cover the liability. Outlook National and international energy situation Nationally and internationally, the year was aﬀected by the discussion of energy supply – and prices in the current situation, with war in Europe and high commodity prices. There is a need for the discussion to instead focus on measures and decisions that contribute to the development of more renewable energy sources in order to meet future energy require- ments and avoid new gas and electricity price crises. The goals of increased electriﬁcation to replace fossil energy sources and reduce greenhouse gas emissions will increase electricity consumption. In order to balance demand and production, politicians and reg- ulators must facilitate signiﬁcant expansion of both power supplies and the grid, for the beneﬁt of society and consumers. Regulatory framework conditions High electricity prices have consequences for international cooperation, framework con- ditions, government revenue and costs, the business sector and private individuals. It is natural that topics related to this have been at the top of the political agenda in many diﬀer- ent contexts. The extremely high and volatile electricity price level during 2022 has made high demands of society as a whole and all types of operators. During the year there were a number of polit- ical ideas and proposals related to changes in framework conditions for power production and electricity sales, and some of these were realised in new regulations. Elmera Group’s companies in Norway were aﬀected by the price information regulation’s stricter require- ments for information on price lists, as well as clariﬁcation of various price elements in con- junction with marketing, and the Settlement Regulation’s amended terms and conditions for the content and appearance of invoices. Electricity producers gained a new tax model with a higher rate of tax on income from land, a land interest rate for wind power was intro- duced, and a production-based high-price contribution that aﬀects prices above 70 øre/ kWh was introduced. There was also discus- sion of further regulation of market models, power export opportunities, and products and prices in the end-user market. During the year, the Group strengthened its dialogue with industry organisations, author- ities and politicians. Elmera Group is a major player in both the business and consumer market, with operations in Norway, Sweden and Finland. The company’s innovation expe- rience, and experience with the formulation of guidelines, and as a representative of the Norwegian industry in Eurelectric, means that the company is listened to as a relevant discussion partner for various political and professional environments. International The European Commission’s consultation on revised market design has a deadline in February 2023 and will be considered by Eurelectric and the industry organisation Fornybar Norway. Many important topics will be debated here, which in the long term may have an impact on both national and European regulations: • Making Electricity Bills More Independent from the Short-Term Cost of Fossil Fuels • Driving Renewable Investments – Europe’s Way Out of the Crisis • Alternatives to Gas to Keep the Electricity System in Balance • Lessons Learned from Short Term Market Interventions • Better Consumer Empowerment and Protection • Stronger Protection against Market Manipulation Financial market for risk reduction So far, little use has been made of the new, long-term ﬁxed-price agreements for the business market, but there is concern that changes in the regulation aﬀecting Norwegian hydroelectric power producers’ basis for cal- culating the tax on income from land as from 2023 will reduce revenue and liquidity in the Nasdaq ﬁnancial power market. Given the expectation of continued volatile power mar- kets, the Board considers it very important to preserve a liquid, transparent and well-func- tioning market for trading in ﬁnancial electric- ity contracts. Increased predictability for customers 2022 was a very demanding year for electric- ity customers. The Board is pleased that the Part 4 – 4.1 Board of Directors’ Report Annual report 2022 88 increase in customers throughout the year entailed positive development for the Group. The Elmera Group’s companies will con- tinue their eﬀorts to further develop the value propositions for power agreements, services and solutions that create increased predicta- bility, and opportunities for energy saving and management. There is a need to continue the work of raising awareness among customers through increased communication and trans- parency. Facilitating electricity agreements and payment solutions that make it easier for consumers and the business community to make choices adapted to their need for pre- dictable ﬁnances will be an important task going forward. Together with the industry organisation Fornybar Norway (formerly Energi Norway), the Group will continue to work to ensure that the Trygg Strømhandel (Safe Power Trade) certiﬁcation scheme is a stamp of quality for the electricity retailers that achieve this certiﬁ- cation. Measures such as Trygg Strømhandel, transparency and the launch of new value propositions to protect customers from price shocks are key aspects of these improvement initiatives. Today, it is very easy, with low entry barri- ers, to become established as an electricity retailer in Norway. Norwegian market experi- ence from autumn and winter 2022 has shown that consumer conﬁdence can be increased by setting higher entry barriers in the market. The Group has proposed to both the indus- try organisation and politicians that speciﬁc equity requirements must be set for the power sales companies to be eligible for a licence to engage in electricity sales. Increased focus on solar The Group is continuously developing its ser- vice and product oﬀering. The company also has an innovation portfolio that is continuously being reﬁned and processed up to the take- over and operation of the line. High energy prices and an interest in energy saving, sus- tainability and production of own electricity present business opportunities. The Group is adapting its products and services on this basis. The business areas for both Private and Business customers are working very actively to help their customers to reduce greenhouse gas emissions and streamline energy use. Both customer groups are oﬀered several concepts to stimulate local production and reduce consumption through energy sav- ing measures. To meet the surge in demand for solar installations, in 2023 the Group is increasing its focus on sales and advisory ser- vices related to the installation of solar panels. Continued consolidation In 2022, a volatile power market demanded the full attention of all players in the market, and the Group did not complete any acqui- sitions during the year. Market shares in Sweden and Finland are currently low and do not impede further expansion. In recent years, the regulatory framework conditions in the Nordic countries have drawn closer to each other. The Board has high hopes of being able to continue the Group’s consolidation strategy in Norway and the Nordic region in 2023. The cooperation with Telia Norge on Fjordkraft Mobil AS was agreed on just before the end of the year. The Board sees this as a good development opportunity for the mobile business. In 2022, the Group’s activities were devel- oped and diversiﬁed in various business areas. In a complex and demanding mar- ket, the Elmera Group’s size, resources and expertise are a very sound basis for further operation and development. The Board would like to thank everyone who works for the Group for this year’s results and their eﬀorts in a year that was challenging for consumers, employees and everyone asso- ciated with the energy market. Part 4 – 4.1 Board of Directors’ Report The Board of Directors of Elmera Group ASA, Bergen, 28 March 2023. Per Oluf Solbraa Board member Heidi Theresa Ose Board member Marianne Unhjem-Solbjørg Board member Elisabeth M. Norberg Board member Rolf Barmen CEO Frank Økland Board member Steinar Sønsteby Chairman Live Bertha Haukvik Board member Tone Wille Board member 4.2 Financial statements Elmera Group Part 4 – 4.2 Financial statements Elmera Group Consolidated statement of proﬁt or loss 90 Consolidated statement of comprehensive income (loss) 91 Consolidated statement of ﬁnancial position 92 Consolidated statement of changes in equity 94 Consolidated statement of cash ﬂows 95 Annual report 2022 89 Annual report 2022 90 NOK in thousands Note 2022 2021 Restated Continuing operations Revenue 4, 5 25 521 514 15 075 445 Direct cost of sales 4, 6, 19 (23 823 519) (13 357 147) Personnel expenses 4, 11, 18, 23 (421 029) (409 123) Other operating expenses 4, 12 (574 946) (488 517) Depreciation and amortisation 4, 5, 15, 16,25 (389 956) (403 084) Impairment of intangible assets and cost to obtain contracts 16,19 (39 282) (9 762) Operating proﬁt 272 781 407 814 Income/loss from investments in associates and joint ventures 28 429 2 637 Interest income 7 26 952 12 801 Interest expense lease liability 25 (1 934) (2 374) Interest expense 7 (156 876) (66 464) Other ﬁnancial items, net 7, 12 (12 660) (19 219) Net ﬁnancial income/(cost) (144 089) (72 619) Proﬁt/(loss) before tax 128 692 335 195 Income tax (expense)/income 13 (54 845) (78 166) Proﬁt/(loss) for the year 73 847 257 029 Basic earnings per share (in NOK) 14 0,67 2,25 Diluted earnings per share (in NOK) 14 0,66 2,22 Consolidated statement of profit or loss Part 4 – 4.2 Financial statements Elmera Group Annual report 2022 91 NOK in thousands Note 2022 2021 Restated Proﬁt/(loss) for the year 73 847 257 029 Other comprehensive income: Items which may be reclassiﬁed over proﬁt or loss in subsequent periods: Hedging reserves, cash ﬂow hedges (net of tax) 10 16 209 (71 347) Currency translation diﬀerences (756) (56 574) Total 15 454 (127 921) Items that will not be reclassiﬁed to proﬁt or loss: Actuarial gain/(loss) on pension obligations (net of tax) 13, 18 3 610 17 577 Total 3 610 17 577 Total other comprehensive income/(loss) for the year, net of tax 19 064 (110 343) Total comprehensive income/(loss) for the year 92 911 146 686 Consolidated statement of comprehensive income (loss) Part 4 – 4.2 Financial statements Elmera Group Annual report 2022 92 NOK in thousands Note 2022 2021 Restated Assets Non-current assets Deferred tax assets 13 34 990 35 092 Right-of-use assets property plant and equipment 25 66 195 82 806 Property, plant and equipment 15 8 198 8 098 Goodwill 16 1 418 776 1 419 451 Intangible assets 16 558 325 694 630 Cost to obtain contracts 5 295 980 287 728 Investments in associates and joint ventures 28 14 234 13 805 Derivative ﬁnancial instruments 7, 8, 9 1 863 551 348 745 Net plan assets of deﬁned beneﬁt pension plans 18 4 178 - Other non-current ﬁnancial assets 7 48 285 54 784 Total non-current assets 4 312 711 2 945 136 Current assets Intangible assets 16 763 7 518 Inventories 460 2 146 Trade receivables 7, 22 7 551 433 5 183 128 Derivative ﬁnancial instruments 7, 8, 9 2 370 117 1 634 021 Other current assets 21 66 025 38 847 Cash and cash equivalents 7 70 548 306 627 Total current assets 10 059 347 7 172 287 Total assets 14 372 058 10 117 423 Equity and liabilities Equity Share capital 17 32 590 34 291 Share premium 17 993 294 992 094 Other equity 214 241 647 884 Total equity 1 240 126 1 674 269 Consolidated statement of financial position Part 4 – 4.2 Financial statements Elmera Group Annual report 2022 93 NOK in thousands Note 2022 2021 Restated Non-current liabilities Employee beneﬁt obligations 18 79 780 93 837 Interest-bearing long term debt 7 629 169 720 009 Deferred tax liabilitites 13 100 280 103 620 Lease liability- long term 25 49 477 65 259 Derivative ﬁnancial instruments 7, 8, 9 1 492 743 240 622 Onerous contract provisions 19 784 239 337 135 Other provisions for liabilities 29 619 16 740 Total non-current liabilities 3 165 307 1 577 223 Current liabilities Trade and other payables 7, 22 5 828 373 4 516 589 Overdraft facilities 7 534 112 - Interest-bearing short term debt 7 275 000 - Current income tax liabilities 13 50 506 94 283 Derivative ﬁnancial instruments 7, 8, 9, 10 1 692 584 721 854 Social security and other taxes 313 504 116 390 Lease liability- short term 25 20 284 21 055 Onerous contract provisions 19 285 336 751 893 Other current liabilities 7, 20 966 927 643 868 Total current liabilities 9 966 625 6 865 932 Total liabilities 13 131 932 8 443 154 Total equity and liabilities 14 372 058 10 117 423 Consolidated statement of ﬁnancial position Per Oluf Solbraa Board member Heidi Theresa Ose Board member Marianne Unhjem-Solbjørg Board member Elisabeth M. Norberg Board member Rolf Barmen CEO Frank Økland Board member Steinar Sønsteby Chairman Live Bertha Haukvik Board member Tone Wille Board member The Board of Directors of Elmera Group ASA, Bergen, 28 March 2023. Part 4 – 4.2 Financial statements Elmera Group Annual report 2022 94 Consolidated statement of changes in equity NOK in thousands Issued capital Treasury shares Share premium Hedging reserves Foreign currency translation reserve Retained earnings Total Balance at 31 December 2020 (As reported) 34 285 - 991 614 - (11 201) 929 348 1 944 047 Prior period corrections (see note 3) - - - - - (20 873) (20 873) Balance at 1 January 2021 34 285 - 991 614 - (11 201) 908 475 1 923 173 Proﬁt/(loss) for the year - - - - - 257 029 257 029 Share-based payment (note 27) - - - - - 3 910 3 910 Other comprehensive income/(loss) for the year, net of tax - - - (71 347) (56 574) 17 577 (110 343) Total comprehensive income/(loss) for the period incl. share-based payment - - - (71 347) (56 574) 278 516 150 595 Share capital increase (note 14) 6 - 480 - - - 486 Dividends paid (note 14) - - - - - (399 986) (399 986) Transactions with owners 6 - 480 - - (399 986) (399 500) Balance at 31 December 2021 34 291 - 992 094 (71 347) (67 775) 787 005 1 674 269 Balance at 1 January 2022 34 291 - 992 094 (71 347) (67 775) 787 005 1 674 269 Proﬁt/(loss) for the year - - - - - 73 847 73 847 Share-based payment (note 27) - - - - - 4 790 4 790 Other comprehensive income/(loss) for the year, net of tax - - - 16 209 (756) 3 610 19 064 Total comprehensive income/(loss) for the period incl. share-based payment - - - 16 209 (756) 82 247 97 701 Share buyback (note 17) - (1 715) - - - (131 112) (132 827) Share capital increase (note 14) 15 - 1 200 - - - 1 215 Dividends paid (note 14) - - - - - (400 231) (400 231) Transactions with owners 15 (1 715) 1 200 - - (531 343) (531 843) Balance at 31 December 2022 34 306 (1 715) 993 294 (55 137) (68 531) 337 909 1 240 126 Part 4 – 4.2 Financial statements Elmera Group Annual report 2022 95 NOK in thousands Note 2022 2021 Restated Operating activities Proﬁt/(loss) before tax 128 692 335 195 Adjustments for: Depreciation 15,16 183 760 236 624 Depreciation right-of-use assets 25 20 303 19 687 Amortisation of cost to obtain contracts 5 185 893 146 773 Impairment of intangible assets 16 39 282 9 762 Interest income 7 (26 952) (12 801) Interest expense lease liability 25 1 934 2 374 Interest expense 7 156 876 66 464 Income/loss from investments in associates and joint ventures 28 (429) (2 637) Change in long-term receivables 7 25 (3 882) Share based payment expense 27 4 790 3 910 Change in post-employment liabilities 18 (13 607) 5 544 Payments to obtain a contract 5 (237 550) (264 152) Changes in working capital (non-cash eﬀect): Impairment loss recognised in trade receivables 7 4 403 (57 666) Provision for onerous contracts 19 (39 256) 1 019 479 Change in fair value of derivative ﬁnancial instruments 7, 8 12 182 (1 066 055) Changes in working capital: Inventories 1 686 251 Trade receivables 7,22 (2 385 823) (3 667 407) Purchase of el-certiﬁcates 16 (9 032) (86 044) Non-cash eﬀect from cancelling el-certiﬁcates 16,20 9 394 85 898 Purchase of guarantees of origination 16 (29 494) (11 206) Non-cash eﬀect from disposal of guarantees of origination 16 35 979 7 028 Other current assets 21 (26 609) 127 465 Trade and other payables 7,22 1 297 999 3 505 284 Other current liabilities 20 515 278 158 236 Cash generated from operations (170 276) 558 125 Interest paid (123 449) (67 860) Interest received 26 952 12 801 Income tax paid 13 (103 339) (123 774) Net cash from operating activities (370 112) 379 293 Condensed consolidated statement of cash flows Part 4 – 4.2 Financial statements Elmera Group Annual report 2022 96 NOK in thousands Note 2022 2021 Restated Investing activities Purchase of property, plant and equipment 15 (3 325) (2 742) Purchase of intangible assets 16 (41 007) (83 225) Net cash outﬂow on acquisition of subsidiares 20 - (42 674) Net (outﬂow)/proceeds from non-current receivables 7 6 474 12 975 Net (outﬂow)/proceeds from other long-term liabilities 13 485 3 164 Net cash used in investing activities (24 373) (112 502) Financing activities Proceeds from overdraft facilities 7 534 112 (29 400) Proceeds from revolving credit facility 7 275 000 - Proceeds from issuance of shares 14 1 215 486 Dividends paid 14 (400 231) (399 986) Purchase of treasury shares 17 (132 827) - Instalments of long term debt 7 (93 700) (93 700) Payment of lease liability 25 (20 245) (19 095) Net cash used in ﬁnancing activities 163 324 (541 696) Net change in cash and cash equivalents (231 162) (274 905) Cash and cash equivalents at 1 January 306 627 599 348 Eﬀects of exchange rate changes on cash and cash equivalents (4 918) (17 816) Cash and cash equivalents at 31 December 70 548 306 627 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 98 Note 2 Signiﬁcant accounting judgements, estimates and assumptions 108 Note 3 Restatement of prior periods 110 Note 4 Segment information 112 Note 5 Revenue recognition 115 Note 6 Direct cost of sales 119 Note 7 Financial assets and ﬁnancial liabilities 119 Note 8 Fair value measurement of ﬁnancial instruments 126 Note 9 Financial risk management objectives 129 Note 10 Hedge accounting 134 Note 11 Personnel expenses 136 Note 12 Other operating expenses and other ﬁnancial items 137 Note 13 Income tax 138 Note 14 Earnings per share 141 Note 15 Property, plant and equipment 142 Note 16 Intangible assets 143 Note 17 Share capital 147 Note 18 Pension liabilities 149 Note 19 Onerous contract provisions 156 Note 20 Other current liabilities 158 Note 21 Other current assets 158 Note 22 Related party transactions 159 Note 23 Remuneration to the Executive management and Board of Directors 160 Note 24 Collateral and restricted assets 164 Note 25 IFRS 16 Leases 165 Note 26 List of subsidiaries 167 Note 27 Option Program 168 Note 28 Investments in associates and joint ventures 170 Note 29 Events after the reporting period 170 Directors responsibilty statement 171 Annual report 2022 97 Annual report 2022 98 Note 1 Accounting policies General information These consolidated ﬁnancial statements for Elmera Group ASA for the year ended 31 December 2022, was approved by the Board of Directors on 28 March 2023. Elmera Group ASA and its subsidiaries (together ‘the Group’, “Elmera” or “the Elmera Group”) is a supplier of electrical power in Norway, Sweden and Finland. The company is listed on Oslo Stock Exchange. The Group’s core business is the purchase, sale and portfo- lio management of electrical power to house- holds, private and public companies, and municipalities. The Group is also a provider of mobile phone services to private customers in Norway. Elmera Group ASA is incorporated and dom- iciled 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. This note provides a list of the signiﬁcant accounting policies adopted in the presenta- tion of these consolidated ﬁnancial statements to the extent they have not been disclosed in the other notes below. These policies have been consistently applied to all the years pre- sented, unless otherwise stated. Basis of preparation Compliance with IFRS These 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) 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). New and amended standards adopted by the group The Group has in 2022 adopted the amend- ments to IFRS that apply for the ﬁrst time to ﬁnancial reporting periods commencing on or after 1 January 2022. These amendments have not had a material impact on the Group’s ﬁnancials statements in the current reporting period. New standards and interpretations not yet adopted Certain new accounting standards and inter- pretations have been published that are not mandatory for 31 December 2022 reporting periods and have not been early adopted by the group. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. Basis of consolidation These consolidated ﬁnancial statements include the accounts of Elmera Group ASA and its subsidiaries (note 26). Going concern The Group’s consolidated ﬁnancial statements is prepared on a going concern basis. When assessing this assumption, management has assessed all available information about the future. This comprises information about net cash ﬂows from existing customer contracts and other service contracts, debt service and obligations. After making such assessments, management has a reasonable expectation 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 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 Part 4 – 4.3 Notes Elmera Group Annual report 2022 99 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. 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- tion with the transfer of control. Acquisition 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 of the acquisition exceeds the fair value of the acquired net assets (when the acquiring entity 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- nised in proﬁt or loss immediately. Goodwill is not depreciated, but is tested at least annually for impairment. In connec- 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 issue debt or equity securities, are expensed as incurred. Foreign currency translation 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 environ- ment in which the entity operates (‘the func- tional currency’). The consolidated ﬁnancial statements are presented in Norwegian kroner (NOK), which is Elmera Group ASA’s func- Note 1 Accounting policies Part 4 – 4.3 Notes Elmera Group Annual report 2022 100 tional and presentation currency. The func- tional currency in all Norwegian subsidiaries in the Group is NOK. The functional currency in the subsidiary Switch Nordic Green AB is Swedish kroner (SEK) for its operations in Sweden, and Euro for its branch operating in Finland. 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 the statement of proﬁt or loss on a net basis within other ﬁnancial items. Non-monetary items that are measured at fair value in a foreign currency are con- verted to NOK using the exchange rates at the date when the fair value was determined. 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 revaluated. 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 follows: • assets and liabilities for each statement of ﬁnancial position presented are translated at the closing rate at the date of that state- 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. Goodwill and fair value adjustments aris- ing on the acquisition of a foreign operation are treated as assets and liabilities of the for- eign operation and translated at the closing rate. Revenue recognition 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 exchange for those goods or services. The Group applies the following ﬁve step method outlined in IFRS15 Revenue from Contracts with Customers, to all revenue streams: 1. Identify the contract(s) with a customer; 2. Identify the performance obligations in the contract; 3. Determine the transaction price; 4. Allocate the transaction price to the per- formance obligations in the contract; and 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 Group then recognises as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisﬁed. For a complete discussion of accounting for revenue, see Note 5 - 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 apportioned to the various price segments that requires judgment by management when assessing. Please refer to note 4 - Segment informa- tion, for disclosures related to any estimate deviations recognised in the current report- ing period related to the previous reporting period. Income tax Income tax The tax expense represents the sum of the tax currently payable and deferred tax. Current tax The tax currently payable is based on taxable proﬁt for the year. Taxable proﬁt diﬀers from net proﬁt as reported in the income state- ment because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Note 1 Accounting policies Part 4 – 4.3 Notes Elmera Group Annual report 2022 101 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 recognised if the temporary diﬀerence arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that aﬀects neither the taxable proﬁt nor the accounting proﬁt. Deferred tax liabilities are recognised for taxable temporary diﬀerences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the group is able to control the reversal of the temporary diﬀerence and it is probable that the temporary diﬀerence will not reverse in the foreseeable future. Deferred tax assets arising from deduct- ible temporary diﬀerences associated with such investments and interests are only rec- ognised to the extent that it is probable that there will be suﬃcient taxable proﬁts against which to utilise the beneﬁts of the temporary diﬀerences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and 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 in other comprehensive income. The measurement of deferred tax liabilities and assets reﬂects the tax consequences that would follow from the manner in which the Group expects, at the end of the report- ing period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are oﬀset when there is a legally enforceable right to set oﬀ current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Current tax and deferred tax for the year Current and deferred tax are recognised in proﬁt or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in 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. Trade receivables, loans and other receivables Trade receivables, loans and other receiva- bles are recognised initially at fair value and subsequently measured at amortised cost using the eﬀective interest method, less pro- vision for impairment. See note 7 and 9 for fur- ther information about the Group’s accounting for trade receivables, loans, other receivables and credit risk. Financial assets 1. Classiﬁcation The Group classiﬁes its ﬁnancial assets in the following measurement categories: • those to be measured subsequently at fair value (either through other comprehensive income, or through proﬁt or loss), and • those to be measured at amortised cost. 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. Financial assets with embedded derivatives are considered in their entirety when deter- mining whether their cash ﬂows are solely payment of principal and interest. See note 7 and 9 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 ﬁnancial asset at its fair value plus, in the case of a ﬁnancial asset not at fair value through proﬁt or loss, transaction costs that are directly attributable to the acquisition of the ﬁnancial asset. Transaction costs of ﬁnancial assets carried at fair value through proﬁt or loss are Note 1 Accounting policies Part 4 – 4.3 Notes Elmera Group Annual report 2022 102 recognised in proﬁt or loss. Debt instruments Subsequent measurement of 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 impaired. Interest income from these ﬁnan- cial assets is included in ﬁnance income using the eﬀective interest rate method. 3. Impairment 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 7 and 9 details how the Group determines whether there has been a signiﬁcant increase in credit risk. For trade receivables, the Group applies the simpliﬁed approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. 4. Derecognition The Group derecognises a ﬁnancial asset when the contractual rights to the cash ﬂows from the asset expire, or when it transfers 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 proﬁt or loss. Energy contracts and hedging activities Energy contracts that are entered into and 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 accordance with IFRS 15 or as cost of sales. Energy contracts that are electricity deriv- atives and qualify for recognition in the state- ment of ﬁnancial position in accordance with IFRS 9, are measured at fair value through proﬁt and loss (unless they are designated as hedging instruments - see below). This includes the following types of energy con- tracts: • Physical power sales contracts which are 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, or purchased for the purpose of hedging physical or ﬁnancial customer contracts. Hence electricity derivatives are only used for economic hedging purposes and not as speculative investments. However, where 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 of the reporting period. Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised imme- diately 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 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 use forward contracts to hedge forecast power purchase transactions. The eﬀective portion of changes in the fair value of derivatives that are designated and qualify Note 1 Accounting policies Part 4 – 4.3 Notes Elmera Group Annual report 2022 103 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 10. 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 has 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 15. 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 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- dated statement of proﬁt or loss. Leases 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: • ﬁxed payments (including in-substance ﬁxed payments), less any lease incentives receivable • 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 exercising that option. 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 rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to 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. To determine the incremental borrowing rate, the Group: • where possible, uses recent third-party ﬁnancing received by the individual les- see as a starting point, adjusted to reﬂect changes in ﬁnancing conditions since third party ﬁnancing was received • uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Group, which does not have recent third party ﬁnancing, and • makes adjustments speciﬁc to the lease, eg term, country, currency and security. 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 reassessed and adjusted against the right- of-use asset. Lease payments are allocated between principal and ﬁnance cost. The 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 Note 1 Accounting policies Part 4 – 4.3 Notes Elmera Group Annual report 2022 104 balance of the liability for each period. Right-of-use assets Right-of-use assets are measured at cost comprising the following: • the amount of the initial measurement of lease liability • any lease payments made at or before the commencement date less any lease incen- tives received • any initial direct costs, and • restoration costs. Right-of-use assets are generally depreci- 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 a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful 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 Payments associated with short-term leases 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. Intangible assets 1) Intangible assets acquired separately 1. El-certificates and Guarantees of Origination (GoOs) Holdings of el-certiﬁcates and GoOs are rec- ognised as intangible assets in accordance with IAS 38 - Intangible Assets and measured using the cost model. The el-certiﬁcates have an inﬁnite life and are acquired to be used to settle the el-certiﬁcate cancellation liability by remitting the respective numbers of certif- icates to the government (refer to accounting policy ‘Provision of El-certiﬁcate cancellation liability’). 2. Software Costs associated with maintaining software programs are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identiﬁable and unique software products controlled by the Group are recognised as intangible assets if, and only if all of the fol- lowing conditions have been demonstrated: • it is technically feasible to complete the software so that it will be available for use • management intends to complete the soft- ware and use or sell it • there is an ability to use or sell the software • 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- able, and • the expenditure attributable to the software during its development can be reliably measured. Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use. 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 economic life and are recognised at cost less deductions for accumulated deprecia- tion. Depreciation is calculated based on the expected customer churn rate. Fixed price elements of customer contracts are recorded as separate assets. 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 at the time of acquisition. The ﬁxed price cus- tomer contracts have deﬁned contract periods and are recognised at cost less deductions for accumulated depreciation. Depreciations follow a pattern that reﬂects how the acquisi- tion value of the contracts are distributed over the remaining contract periods. 5. Tradenames Tradenames acquired in a business com- bination are recognised at fair value at the acquisition date. Tradenames that due to contractual agreements have a ﬁnite useful life are subsequently carried at cost less 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 assets in note 16. 6. Goodwill Goodwill is reported as an indeﬁnite life intangible asset at cost less accumulated 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 1. Software Internal development costs that are directly attributable to the design and testing of identiﬁable and unique software products controlled by the Group are recognised as intangible assets if, and only if all of the fol- Note 1 Accounting policies Part 4 – 4.3 Notes Elmera Group Annual report 2022 105 Note 1 Accounting policies lowing conditions have been demonstrated: • it is technically feasible to complete the software so that it will be available for use • management intends to complete the soft- ware and use or sell it • there is an ability to use or sell the software • 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- able, and • the expenditure attributable to the software during its development can be reliably measured. Directly attributable costs that are capitalised as part of software includes directly related employee costs. 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. Development costs previously recognised as expenses are not recognised as an asset in a subsequent period. Refer to note 16 for details about amortisa- tion methods and periods used by the Group for intangible assets. Impairment of tangible and intangible assets At each balance sheet date, the Group reviews whether there are indication that the carrying amount of the Group’s tangible and intangible assets have suﬀered an impairment loss. Tangible and intangible assets are tested for impairment whenever events or changes 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 cash ﬂow or other beneﬁts that the asset is expected to contribute to the generation of, through its use by the Group). For the purposes of assessing impairment, assets are grouped at the lowest levels for 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, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impair- ment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immedi- ately in proﬁt or loss. Trade and other payables These amounts represent liabilities for goods 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- sequently measured at amortised cost using the eﬀective interest method. Borrowings and credit facilities 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 loss over the period of the borrowings using 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 Other ﬁnancial items, net. Borrowings are classiﬁed as current liabil- ities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Transactions costs incurred when estab- lishing bank overdraft facilities, revolving 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. Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is proba- 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 settle the present obligation at the reporting date, taking into account the risks and uncer- 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 the amount of the receivable can be meas- Part 4 – 4.3 Notes Elmera Group Annual report 2022 106 ured reliably. Onerous contracts Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered 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- tracts are not intended to be settled within 12 months of the reporting date. 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 for every MWh of power sold to end users in Norway and Sweden. 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 provisions using the net liability approach. There is no specific guidance on such schemes under IFRS; however, the net lia- bility approach is one of the commonly used approaches adopted. Hence, the part of the cancellation liability that is covered by the Group’s holdings of el-certiﬁcates is meas- 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 or through forward contracts are not suﬃcient to oﬀset estimated number of certiﬁcates to be handed over to the government). The cancellation liability is presented within other current liabilities and any el-certiﬁcates 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. Employee beneﬁts 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 number of years of service, the salary level at retirement age and the portion of beneﬁts that are paid by the national insurance. The deﬁned beneﬁt pension obligations may be covered by plan assets invested through an insurance company (funded plan). 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- gation at the end of the reporting period less the fair value of any plan assets. The deﬁned beneﬁt obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the deﬁned beneﬁt obligation is determined by discounting the estimated future cash outﬂows using interest 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 in the statement of proﬁt or loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the consolidated state- ment of changes in equity and in the state- ment of ﬁnancial position. Changes in the present value of the deﬁned beneﬁt obligation resulting from plan amend- ments or curtailments are recognised imme- 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 (a fund). The entity has no further payment obligations once the contributions have been paid. The contributions are recognised in Pension expenses which is part of Personnel expenses in the statement of proﬁt or loss when they are due. Share-based compensation Employee share options at Elmera Group rep- 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 the options. On each balance date, the Group revises its estimates of the number of options that are expected to be exercisable. Any adjustments will be recognised in the income statement and corresponding adjustment to equity over the remaining vesting period. The Note 1 Accounting policies Part 4 – 4.3 Notes Elmera Group Annual report 2022 107 proceeds received net of any directly attribut- able transaction costs are credited to share capital and share premium when the options are exercised. Treasury shares Own equity instruments which are reacquired (treasury shares) are deducted from equity. No gain or loss is recognised in the income statement on the purchase, sale, issue, or cancellation of the Company’s own equity instruments. Dividends Provision is made for the amount of any divi- dend declared, appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period. Earnings per share 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 ordinary shares issued during the year and excluding treasury shares (note 14) 2. Diluted earnings per share: Diluted earnings per share adjusts the ﬁgures used in the determination of basic earnings per share to take into account: • the after income tax eﬀect of interest and other ﬁnancing costs associated with dilu- tive potential ordinary shares, and • the weighted average number of additional ordinary shares that would have been out- standing assuming the conversion of all dilutive potential ordinary shares. Government grants Companies within the Group may be entitled to claim refunds / grants for investments in quali- fying assets or in relation to qualifying expend- iture (e.g. the Research & Development tax incentive scheme “SkatteFUNN”). Government grants are not recognised until there is a reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. Government grants are recognised in the consolidated statement of proﬁt and 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 Note 1 Accounting policies or otherwise acquire non-current assets are recognised by deducting the grant from the carrying amount of the asset. The grant is recognised in the Consolidated statement of proﬁt or loss over the life of the depreciable asset as a reduced depreciation expense. Government grants that are receivable as compensation for expenses or losses already incurred with no future related costs to be incurred by the Group are recognised in the Consolidated statement of proﬁt or loss in the period in which they become receivable. Rounding of amounts All amounts disclosed in the consolidated ﬁnancial statements and notes have been rounded oﬀ to the nearest thousand currency units unless otherwise stated. Comparable 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. In addition to restatements of com- parable ﬁgures which are described in detail in note 3, the following reclassiﬁcations to comparable ﬁgures have been made for 2022: Presentation of interest compensation for extended credit days for electricity purchases The interest compensation for extended credit days related to electricity purchase from Statkraft Energi AS, the Group’s main supplier of electrical power, has in previous reporting been recorded in Direct cost of sales. From 2022 and going forward the interest compen- sation will be reported in Interest expense. Comparable ﬁgures for 2021 have been updated to reﬂect these changes, with the reclassiﬁcation of interest compensation of NOKt 23 882. Presentation of onerous contract provisions in statement of ﬁnancial position From 2021 Onerous contract provisions are presented as separate line items in the state- ment of ﬁnancial position. When the oner- ous contracts are not intended to be settled within 12 months of the reporting date, the provisions are presented as non-current. The model used when determining the non-current part of onerous contract provisions have been updated in 2022. To align with the updated model comparative ﬁgures for 31 December 2021 in the statement of ﬁnancial position have been updated, with an increase of NOKt 222 169 for non-current onerous contract pro- visions and a corresponding decrease for cur- rent onerous contract provisions. Part 4 – 4.3 Notes Elmera Group Annual report 2022 108 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 expectations of future events that may have a ﬁnancial impact on the entity and that are believed to be reasonable under the circum- stances. The areas involving signiﬁcant estimates or judgements are: 1) Onerous contract provisions At each reporting date, management assesses if there are contracts in which the unavoidable costs of meeting the Group’s obligations under the contract exceed the economic beneﬁts expected to be received in accordance with IAS 37. The Group has signiﬁcant portfolios of ﬁxed price power contracts with end user custom- ers in the Nordic segment in which the vol- ume is not ﬁxed. These customer contracts do not qualify to be recognised as ﬁnancial instruments. The price risk in these ﬁxed price customer contracts are hedged with ﬁnan- 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 9 for more information regarding the Group’s dif- ferent product types and related market risks. Fixed price customer contracts are assessed as onerous contracts if the esti- mated unavoidable costs of purchasing the estimated power volumes to be delivered on these contracts exceed the ﬁxed price to be received from the custumers. The hedged forward power prices in the corresponding portfolios of derivative hedge contracts are however not taken into consideration when estimating the unavoidable costs as hedge accounting is not applied. Please see note 19 for details of the movement in provisions for onerous contracts. 2) Impairment of goodwill and intangible assets Goodwill and 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. The recoverable amounts of the cash-generating units are determined based 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 Part 4 – 4.3 Notes Elmera Group things, based on risk-free 10-year govern- ment bond rate, observed market risk pre- mium, industry-speciﬁc risk premium and the Group’s cost of debt. For the calculation of the in-perpetuity value, Gordon’s growth model is used. According to Gordon’s model, the termi- nal value of a growing cash ﬂow is calculated as the starting cash ﬂow divided by cost of capital less the growth rate. Please see note 16 for more details regarding impairment test- ing of goodwill at year end, including a sen- sitivity analysis for signiﬁcant assumptions. 3) Recognition of deferred tax asset for tax losses carried forward Deferred tax assets include an amount which relates to carried-forward tax losses of the subsidiary Switch Nordic Green AB. The sub- sidiary has incurred substantial accumulated tax losses in its operations in both Sweden and Finland in periods prior to when the Group acquired this entity in November 2020. The 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 13 for more details regarding deferred tax asset recognised in the Statement of ﬁnancial position. Annual report 2022 109 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. The cost of the deﬁned beneﬁt pension 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 include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complex- ities involved in the valuation and its long-term nature, a deﬁned beneﬁt obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at the reporting date. Please see note 18 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 to the customers. In making the judgement, management applies indicators set out in IFRS 15, of which key indicators are: • is the Group primarily responsible for ful- ﬁlling the promise to provide the speciﬁed goods or services, • does the Group have inventory risks before or after transferring goods or services to the customer, • does the Group have discretion in estab- lishing prices for the speciﬁc goods or services. 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 appropriate. 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 beneﬁts the Group derives from these new 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 Note 2 Signiﬁcant accounting judge- ments, estimates and assump- tions detailed review and evaluation of the historical behavior of these customers, management is satisﬁed that the amortisation method used provides the best allocation of these costs. 7) Hedge accounting The group applies hedge accounting when accounting for ﬁnancial electricity derivatives which are designated to hedge the area price risk associated with forecast power purchase expenses in each of the ﬁve diﬀerent price areas in Norway (NO1, NO2, NO3, NO4, and NO5). The designated ﬁnancial electricity derivatives are in general forward contracts 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), and / or iii) the diﬀerence between the Nordic system price and an area price (EPAD contract). Assessing whether the qualifying criterias for 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 system price forward contracts are the desig- nated hedging instruments. When assessing IFRS 9.6.3.7.a, the group’s assessment is that when hedging area price risk in price areas where the diﬀerence between area price and system price is Part 4 – 4.3 Notes Elmera Group expected to be positive, system price forward contracts does qualify to be designated as a hedging instrument to hedge the area price risk in forecast cash ﬂows for power pur- chases, but only for variability due to change in system price. This assessment applies to the price areas NO1, NO2, and NO5 (in south- ern Norway). The assessment does however not apply when designating system price for- ward contracts to hedge the area prices in price areas NO3 and NO4 in northern Norway. When system price forward contracts are designated for hedging area price risks in forecast power purchases in NO3 and NO4, 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 hedging instrument and the hedged item (all variability in the area price) for the hedging relationship to qualify for the hedge eﬀective- ness requirement in IFRS 9.6.4.1.c. Due to changes in market conditions the correlation between the Nordic system price and area prices in NO3 and NO4 has been signiﬁ- cantly weakened. Thus from the beginning of 2022 the Group does no longer assess such hedging relationship to qualify for this hedge eﬀectiveness requirement. The Group’s strategy when hedging the future cash ﬂows related to power purchases in price areas NO1, NO2 and NO5 has in 2022 changed towards using area price forward contracts as hedging instruments, rather than Nordic system price forward contracts. Please see note 10 for details and further description regarding hedge accounting. Annual report 2022 110 Part 4 – 4.3 Notes Elmera Group Note 3 Restatement of prior periods Prior period comparative ﬁgures have been restated in 2022. Description of restatements 1) A substantial proportion of the Group’s power sales in 2021 was ﬁnally settled after the Group had ﬁnalised its annual ﬁnan- cial statement. Revenues related to sale of power were thus recognised based on an estimate. The Group’s internal control pro- cedures have discovered that the estimate as per 31 December 2021 did not to an ade- quate degree reﬂect all available information regarding power sales settled at the time of reporting. Revenue and Direct cost of sales have been restated as set out in the tables. 2) In prior period reporting the model for measuring fair value of derivative customer contracts did not adjust for the Group’s price margins in such contracts. Thus the fair value of derivative ﬁnancial instruments was over- stated, and the contracts’ total margins were recognised in revenue at initial recognition of the contract. To align with the practice set out in IFRS 9, the model for measuring fair value of these contracts have been adjusted to exclude margins. The revenue from mar- gins are now recognised in the period the derivative contracts are delivered. Prior period Revenue (Unrealised gains and losses on derivative customer contracts), and fair value of Derivative ﬁnancial instruments have been restated as set out in the tables. 3) At each reporting date, management assesses if there are contracts in which the unavoidable costs of meeting the Group’s obligations under the contract exceed the economic beneﬁts expected to be received (onerous contracts) in accordance with IAS 37. Internal control procedures have in 2022 identiﬁed that the assessment at year end 2021 failed to identify and recognise a portfo- lio of ﬁxed price customer contracts as oner- ous contracts. Prior period Direct cost of sales (change in provisions for onerous contracts), and Onerous contract provisions have been restated as set out in the tables. Consolidated statement of proﬁt or loss - Prior period corrections NOK in thousands 1) 2) 3) Total 2021 Revenue (73 132) (22 414) - (95 546) Direct cost of sales 8 963 - (22 740) (13 778) Operating proﬁt (64 169) (22 414) (22 740) (109 324) Income tax (expense)/income 14 117 4 864 5 003 23 984 Proﬁt/(loss) for the period (50 052) (17 550) (17 737) (85 340) Basic earnings per share (in NOK) (0,44) (0,15) (0,16) (0,75) Diluted earnings per share (in NOK) (0,43) (0,15) (0,15) (0,74) Annual report 2022 111 Part 4 – 4.3 Notes Elmera Group NOK in thousands 1) 2) 3) 31 December 2021 Assets Derivative ﬁnancial instruments (non-current) - (16 866) - (16 866) Derivative ﬁnancial instruments (current) - (27 203) - (27 203) Trade receivables (73 132) - - (73 132) Total assets (73 132) (44 069) - (117 201) Equity and liabilities Retained earnings (50 052) (38 424) (17 738) (106 213) Deferred tax liabilitites - (9 695) (5 003) (14 698) Derivative ﬁnancial instruments (non-current) - 2 142 - 2 142 Derivative ﬁnancial instruments (current) - 1 908 - 1 908 Onerous contract provisions (non-current) - - 15 321 15 321 Onerous contract provisions (current) - - 7 420 7 420 Current income tax liabilities (14 117) - - (14 117) Other current liabilities (8 963) - - (8 963) Total equity and liabilities (73 132) (44 069) - (117 201) Consolidated statement of ﬁnancial position - Prior period corrections Note 3 Restatement of prior periods NOK in thousands 1) 2) 3) 1 January 2021 Assets Derivative ﬁnancial instruments (non-current) - (13 709) - (13 709) Derivative ﬁnancial instruments (current) - (11 995) - (11 995) Total assets - (25 705) - (25 705) Equity and liabilities Retained earnings - (20 873) - (20 873) Deferred tax liabilitites - (4 831) - (4 831) Total equity and liabilities - (25 705) - (25 705) Annual report 2022 112 Note 4 Segment information Disaggregation of revenue from contracts with customers Operating segments are reported in a man- ner consistent with the internal ﬁnancial reporting provided to the chief operating decision-maker. The chief operating deci- sion 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 examines the Group’s performance from a type of services perspective. Segment per- formance 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 revenue, unrealised gains and losses on derivatives, impairment of intangible assets, depreciation of acquisitions, and change in provisions for onerous contracts. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment perfor- mance. The accounting policies of the report- able 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 seg- ment. New growth initiatives comprise of other business activities (sale of mobile service to private customers and power sale, included related services, to Alliance Partners) which are not considered separate operating seg- ments. Part 4 – 4.3 Notes Elmera Group Annual report 2022 113 2022 NOK in thousands Consumer Business Nordic Total reportable segments New growth initiatives Total 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 Acquisition related costs - 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 Note 4 Segment information *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 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) Part 4 – 4.3 Notes Elmera Group Annual report 2022 114 2021 Restated NOK in thousands Consumer Business Nordic Total reportable segments New growth initiatives Total Revenue adjusted 7 802 881 5 257 664 1 773 888 14 834 434 365 732 15 200 165 Direct cost of sales adjusted (6 691 380) (4 788 340) (1 710 899) (13 190 618) (285 170) (13 475 788) Net revenue adjusted 1 111 502 469 324 62 989 1 643 815 80 562 1 724 378 Personnel and other operating expenses adjusted (586 248) (159 441) (70 661) (816 349) (83 634) (899 993) Depreciation and amortisation adjusted (164 206) (27 213) (17 931) (209 350) (5 105) (214 455) Total operating expenses adjusted (750 454) (186 654) (88 592) (1 025 699) (88 740) (1 114 448) Operating proﬁt adjusted 361 048 282 671 (25 603) 618 116 (8 177) 609 930 Acquisition related costs (1 034) Other one- oﬀ items 3 387 Unallocated revised net revenue (64 169) Depreciation of acquisitions * (188 629) Estimate deviations 11 515 Unrealised gains and losses on derivatives 1 066 055 Change in provisions for onerous contracts (1 019 479) Impairment of intangible assets (9 762) Operating proﬁt (EBIT) 407 814 Note 4 Segment information NOK in thousands 2021 TrønderEnergi Marked acquisition (10 434) Oppdal Everk Kraftomsetning acquisition (2 289) Vesterålskraft Strøm acquisition (1 936) Innlandskraft acquisition (128 650) Troms Kraft Strøm acquisition (42 031) Other customer acquisitions (3 289) Depreciation of acquisitions (188 629) * 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. Part 4 – 4.3 Notes Elmera Group Annual report 2022 115 Note 5 Revenue recognition The following table summarises revenue from contracts with customers: Timing of revenue recognition Over time: NOK in thousands 2022 2021 Restated Revenue - Consumer segment 13 025 916 7 697 878 Revenue - Business segment 11 041 944 5 219 008 Revenue - Nordic segment 2 228 015 1 773 888 Revenue - New growth initiatives 340 764 360 175 Total revenue recognised over time 26 636 639 15 050 949 At a point in time: Revenue - Consumer segment 97 053 105 003 Revenue - Business segment 53 343 38 657 Revenue - Nordic segment - - Revenue - New growth initiatives 19 242 5 557 Total revenue recognised at a point in time 169 638 149 217 Total revenue from contracts with customers (Revenue adjusted) 26 806 276 15 200 165 Other revenue: Estimate deviations - 8 422 Unallocated revised revenue - (73 132) Unrealised gains and losses on derivative customer contracts (1 284 761) (60 010) Total revenue 25 521 514 15 075 445 Part 4 – 4.3 Notes Elmera Group Annual report 2022 116 Sale of electricity 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 from Statkraft AS in Norway. Services are billed on a rate per kWh of electricity procured on behalf of the alliance partner. The rate stip- ulated in the contract with alliance partners is based on the market price for electricity in the Norway electricity wholesale market plus a ﬁxed markup. The Group is the agent in this transaction as it does not have control over the electricity being procured on behalf of the ‘alliance‘ customers and accordingly recog- nises revenue, over time, equal to the amount of the markup billed to the alliance partners. In addition, the Group provides certain additional services, namely procurement of el-certiﬁcates, electricity purchase contracts and derivative forward contracts and options contracts on behalf of the alliance partner, all related to the electricity management strategy of the alliance partners. Services related to procurement of electricity and related instru- ments are billed on a rate per kWh of volume of electricity under contract. The rate stipu- 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. The fees depend on the type of service and can be ﬁxed monthly, ﬁxed annually and / or ﬁxed fees per transactions. With respect to these deliveries the Group is not an agent and revenue is recognised, over time or at a point in time corresponding to the Group’s perfor- mance obligations for respective services. Subscription – mobile phone services The Group oﬀers mobile phone subscriptions to private consumers, and charges a ﬁxed price per month for use of text messaging, call and data services. The customers pay a monthly ﬁxed amount on each subscription and any unused data can be rolled over to the next month. The data that is rolled over can not exceed the total data amount indi- cated in the customers subscriptions. The customer is invoiced monthly in advance for the ﬁxed amount, while any consumption not included in the ﬁxed monthly price is invoiced 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, reﬂecting the consumer’s consummation of the services as the customer receives a ﬁxed amount to use each month and cannot transfer unused amounts to the next period. Revenue from data is recognised over time reﬂecting the actual use of data by the cus- tomer. To the extent the customer do not use all of the data in a given period, the Group recognises a liability, unearned revenue, which is released to revenue as and when the customer consummate this data. Other Services Other services revenue consist primarily of revenues from: • Insurance sales; • Subscription revenue - tools; and • Other miscellaneous products and ser- vices. As it relates to insurance sales, the most sig- niﬁcant judgment is determining whether the 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. Note 5 Revenue recognition Part 4 – 4.3 Notes Elmera Group Annual report 2022 117 Part 4 – 4.3 Notes Elmera Group The Group charges a ﬁxed fee for access to tools and these contracts are typically on a month-to-month basis (with no speciﬁed minimum term). Accordingly the Group recog- nizes revenue for the monthly amount billable to the customer. Contracts with Multiple Performance Obligations The Group periodically enters into contracts, or multiple contracts at or near the same time, with its customers in which a customer may purchase a combination of Electricity services and other services, such as procure- ment solutions or professional services. These contracts include multiple promises that the Group evaluates to determine if the promises are separate performance obligations. Once the Group determines the performance obli- gations, the Group determines the transaction price, which includes estimating the amount of variable consideration to be included in the transaction price, if any. The Group then allocates the transaction price to each per- formance obligation in the contract based on a relative stand-alone selling price method or using the variable consideration allocation exception if the required criteria are met. The corresponding revenues are recognised as the related performance obligations are sat- isﬁed as discussed in the revenue categories above. The following table summarises assets recognised from the cost to obtain a contract: NOK in thousands 2022 2021 Balance as at 1 January 287 728 172 656 Additions 237 550 264 152 Amortisation during the year (185 893) (146 773) Impairment* (39 282) - Currency translation diﬀerences (4 122) (2 307) Balance as at 31 December 295 980 287 728 *See note 19 for more details regarding impairment of cost to obtain contracts. Contract Balances The Group receives payments from its cus- tomers based on billing schedules estab- lished in each contract. Up-front payments and fees are recorded as deferred revenue upon receipt or when due, and may require deferral of revenue recognition to a future period until the Group performs its obliga- tions under these arrangements. Amounts are recorded as accounts receivable when the Group’s right to consideration is unconditional (when the customer obtains control of prom- ised goods or services). Cost to obtain Contracts The Group capitalises commission expenses paid to external sales personnel that are incre- mental to obtaining customer contracts. The judgments made in determining the amount of costs incurred include whether the commis- sions are in fact incremental and would not have occurred absent the customer contract. Costs to obtain a contract are amortised over the expected period of beneﬁt that has been determined to be approximately 36 months, presented as part of Depreciation and amor- tisation.These costs are periodically reviewed for impairment. Note 5 Revenue recognition The Group does not assess whether a con- tract has a signiﬁcant ﬁnancing component if the expectation at contract inception is such that the period between payment by the cus- tomer and the transfer of the promised goods or services to the customer will be one year or less. Annual report 2022 118 The following tables present changes in the Group’s contract assets and liabilities during the year ended 31 December, 2021 and 2022: Contract assets NOK in thousands 2022 2021 Restated Balance as at 1 January 3 831 626 787 514 Revenue recognised from performance obligations satisﬁed in previous periods - 8 422 New contract assets during the period less transfer to receivables 2 007 670 3 046 977 Currency and other eﬀects (10 024) (11 287) Balance as at 31 December 5 829 272 3 831 626 Contract liabilities NOK in thousands 2022 2021 Balance as at 1 January 47 280 124 043 Revenue recognised that was included in opening balance (47 280) (124 043) New contract liabilities less transfer to revenue 31 978 47 280 Currency and other eﬀects - - Balance as at 31 December 31 978 47 280 Transaction Price Allocated to Future Performance Obligations IFRS 15 requires that the Group disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisﬁed as 31 December 2022 and 31 December 2021. The guidance provides certain practical expedients that limit this requirement. Majority of the Groups contracts meet either of the following prac- tical expedients provided by IFRS 15 and accordingly the Group has applied this prac- tical expedient. 1. The performance obligation is part of a contract that has an original expected duration of one year or less. 2. The entity recognises revenue from its sat- isfaction of the performance obligations in the amount billable to the customer in accordance with paragraph B16 of IFRS 15. Concentrations of Credit Risk The Group do not have any customers that comprised more than 10% of the Group’s rev- enue for year ended 31 December 2022 and 31 December 2021. As of 31 December 2022 and 31 December 2021 the Group do not have signiﬁcant cus- tomers that comprises more than 10% of accounts receivable. Note 5 Revenue recognition Part 4 – 4.3 Notes Elmera Group Annual report 2022 119 Part 4 – 4.3 Notes Elmera Group Note 6 Direct cost of sales NOK in thousands 2022 2021 Restated Purchase of electrical power and el certiﬁcates 24 804 557 13 165 847 Other direct cost of sales 295 188 297 885 Change in provisions for onerous contracts (39 256) 1 019 479 Unrealised gains and losses on derivative hedge contracts (1 236 970) (1 126 064) Total direct cost of sales 23 823 519 13 357 147 Note 7 Financial assets and financial liabilities The Group holds the following ﬁnancial instruments: Financial assets NOK in thousands Notes 2022 2021 Restated Financial assets at amortised cost Trade receivables * 7(a) 1 722 161 1 351 502 Other non-current ﬁnancial assets 7(a) 48 285 54 784 Cash and cash equivalents 7(d) 70 548 306 627 Derivative ﬁnancial instruments Derivative ﬁnancial instruments at fair value through OCI 8,9,10 2 077 - Derivative ﬁnancial instruments at fair value through proﬁt or loss 8,9 4 231 590 1 982 766 Total ﬁnancial assets 6 074 662 3 695 679 * excludes contract assets Financial liabilities NOK in thousands Notes 2022 2021 Restated Liabilities at amortised cost Trade and other payables 7(b) 5 828 373 4 516 589 Overdraft facilities 7(c) 534 112 - Interest-bearing short term debt 7(c) 275 000 - Interest-bearing long term debt 7(c) 722 869 813 709 Derivative ﬁnancial instruments Derivative ﬁnancial instruments at fair value through OCI 8,9,10 72 772 78 962 Derivative ﬁnancial instruments at fair value through proﬁt or loss 8,9 3 112 556 883 514 Total ﬁnancial liabilities 10 545 680 6 292 774 Annual report 2022 120 Part 4 – 4.3 Notes Elmera Group Note 7 Financial assets and ﬁnancial liabilities 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 2022 2021 Restated Interest from assets held at amortised cost 26 952 12 801 Interest expense from liabilites at amortised cost (156 876) (66 464) Net impairment expense recognised on trade receivables* 7(a) 40 258 (22 348) Unrealised gains and losses on derivative ﬁnancial instruments** 5,6 (47 791) 1 066 056 Total net foreign exchange gains(losses) recognised in other ﬁnancial items 12(b) (3 351) (7 648) Total ﬁnancial income and expense (140 809) 982 397 * 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 5), or b) Direct cost of sales - when the derivative instrument is purchased for the purpose of hedging physical or ﬁnancial customer contracts (see 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 the Group currently has a legally enforceable right to oﬀset the recognised amounts, and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. When oﬀsetting 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. The following table presents the recognised ﬁnancial instruments that are oﬀset. 2022 Financial assets NOK in thousands Gross amount Gross amount set off Net amount Derivative ﬁnancial instruments Electricity derivatives 7 273 986 (3 040 318) 4 233 668 Other derivatives - - - Total derivative ﬁnancial assets 7 273 986 (3 040 318) 4 233 668 Financial liabilities NOK in thousands Gross amount Gross amount set off Net amount Derivative ﬁnancial instruments Electricity derivatives 6 225 317 (3 040 318) 3 184 999 Other derivatives 328 - 328 Total derivative ﬁnancial liabilities 6 225 645 (3 040 318) 3 185 327 Annual report 2022 121 7(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. 2022 Loss allowance provision - Days past due NOK in thousands Current 31-60 days 61-90 days 91-120 days 121-180 days More than 180 days Total Gross 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 2021 Loss allowance provision - Days past due NOK in thousands Current 31-60 days 61-90 days 91-120 days 121-180 days More than 180 days Total Gross nominal amount Trade receivables - Power sales - Consumer customers 6 223 710 395 531 282 20 104 28 244 894 503 Trade receivables - Power sales - Business customers 1 414 445 102 768 1 155 12 638 16 522 500 113 Trade receivables - Mobile sales - Consumer customers 2 1 66 63 111 204 447 2 099 Total Loss allowance provision 7 639 1 156 562 1 362 1 548 32 946 45 213 1 396 715 Part 4 – 4.3 Notes Elmera Group Annual report 2022 122 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 2022 2021 Opening balance, 1 January 45 213 105 080 Loss allowance recognised in proﬁt or loss for the period 4 403 (59 543) Currency translation diﬀerence (208) (324) At 31 December 49 408 45 213 During the year, the following gains/(losses) were recognised in proﬁt or loss in other expenses in relation to impaired receivables: NOK in thousands 2022 2021 Receivables written oﬀ 39 518 53 846 Movement in provision for impairment 4 403 (59 543) Received payment on previously written oﬀ receiavbles (3 663) (16 651) Net impairment expense recognised on trade receivables 40 258 (22 348) 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 2022 2021 Loans to employees* 14 076 16 251 Other long term receivables from customers** 21 686 21 711 Capitalised transaction costs*** 6 190 11 240 Other 6 333 5 582 Total 48 285 54 784 7(a) Trade receivables and Other non-current ﬁnancial assets * Loans to employees include next year’s installments. Instalments in 2023 amount to NOKt 2 351. ** Customers who purchase home chargers for electrical vehicles can settle through a 36 month repayment plan. The Group has a lien in the home charger until it is repaid. *** Transaction costs related to establishing the RCF, the guarantee facility and the overdraft facility, see more details in note 7(c). Part 4 – 4.3 Notes Elmera Group Annual report 2022 123 Part 4 – 4.3 Notes Elmera Group 7(c) Credit facilities 7(b) Trade and other payables Current liabilities NOK in thousands 2022 2021 Trade and other payables 5 828 373 4 516 589 Trade and other payables are unsecured and are usually paid within 30 days of recognition. The payment terms of the Group’s power purchase agreement with Statkraft Energi AS are 30-days in Norway and 45-days in Sweden and Finland. In addition, this agreement in Norway includes a right for the Group to postpone these payments for additional 30 days if current cash in hand does not cover the liability. The power purchases under this agreement are invoiced monthly in arrear and are interest bearing. 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 2022 2021 Term loan NIBOR 3 months + 1,30 % 726 175 819 875 Revolving credit facility NIBOR 3 months + 1,30 % 275 000 Total principal amounts 1 001 175 819 875 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 is in September 2024. In Q4 2022 the interest rate margin on the term loan facility and the revolving credit facility was decreased from 1,75% to 1,30%. 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. NOKt 460 000 was drawn upon this facility in September 2020, in order to repay a former term loan, and to partly ﬁnance the aquisition of Innlandskraft AS. In November 2020 additional NOKt 477 000 was drawn upon the facility in order to partly ﬁnance the aquisition of Troms Kraft Strøm AS. The term loan principals are being repaid in quarterly instalments of total NOKt 23 425. The ﬁrst quarterly instalment was repaid in December 2020. At 31 December 2022 the remaining term loan principal balance is NOKt 726 175. The loan instalments of NOKt 93 700 that are due the next twelve months have been reclassiﬁed from interest-bearing long term debt to interest-bearing short term debt, which is included in other current liabilities in the statement of ﬁnancial position. 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 150 000 on this facility in Q1 2022, and another NOKt 125 000 in Q2 2022. The revolving credit facility is classiﬁed as interest-bearing short term debt in the statement of ﬁnancial position. Annual report 2022 124 7(c) Credit facilities 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 2022 guarantees of total NOKt 2 040 442 are issued under the guarantee facility. The overdraft facility - NOKt 1 300 000 The overdraft facility has been renewed and is available one year from September 2022. The overdraft facility was increased from NOKt 1 000 000 to NOKt 1 300 000 in Q3 2022. At 31 December 2022 the Group has drawn NOKt 534 112 on the overdraft facility. Security The Group’s trade receivables has been pledged as security for all credit facilities under the facilities agreement. See note 24. 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 long term debt* Interest-bearing short term debt* Lease liability Overdraft facilities Total Balance at 1 January 2021 906 508 - 84 808 29 400 1 020 716 Cash ﬂows (93 700) - (19 095) (29 400) (142 195) New leases - - 20 769 - 20 769 Foreign exchange adjustments - - (167) - (167) Other changes 901 - - - 901 Balance at 31 December 2021 813 709 - 86 314 - 900 023 Balance at 1 January 2022 813 709 - 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 2021 722 869 275 000 69 761 534 112 1 601 741 * Includes instalments on term loans due within 12 months (NOKt 93 700), which are presented as part of Other current liabilities in the statement of ﬁnancial posi- tion, see note 19. Part 4 – 4.3 Notes Elmera Group Annual report 2022 125 7(d) Cash and cash equivalents Current assets NOK in thousands 2022 2021 Cash at bank and in hand 70 548 306 627 Total 70 548 306 627 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 24 for information about restricted cash. Part 4 – 4.3 Notes Elmera Group Annual report 2022 126 Note 8 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 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 Recurring fair value measurements At 31 December 2021 Restated NOK in thousands Level 1 Level 2 Level 3 Total Financial assets Derivative ﬁnancial instruments - 1 970 399 12 368 1 982 766 Total ﬁnancial assets at fair value - 1 970 399 12 368 1 982 766 Financial liabilities Derivative ﬁnancial instruments - 950 510 11 967 962 477 Total ﬁnancial liabilities at fair value - 950 510 11 967 962 477 Part 4 – 4.3 Notes Elmera Group Annual report 2022 127 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 hierarchy levels as at the end of the reporting period. Level 1: The fair value of ﬁnancial instruments traded in active markets (such as publicly traded derivatives, and trading and avail- able-for-sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for ﬁnancial assets held by the Group is the current bid price. These instruments are included in level 1. Level 2: The fair value of ﬁnancial instru- ments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and relies as little as possible on entity-speciﬁc estimates. If all signiﬁcant inputs required to fair value an instrument are observable, the instrument is included in level 2. 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 included in level 3. Valuation techniques used to determine fair values Speciﬁc valuation techniques used to value derivative ﬁnancial instruments, in majority electricity derivatives, include present value of future cash ﬂows based on forward power prices from Nasdaq Commodities at the bal- ance sheet date. In the case of material long- term contracts, the cash ﬂows are discounted at a discount rate calculated by using interest rates on Government bonds with matching maturities, added a risk premium of 0,2 per- centage points. Valuation method is used for bilateral forward contracts and option contracts associated with purchase and sale of electricity. Key inputs to the valuation are expected power prices (Nordic system price and area prices in the power price areas in Norway, Sweden and Finland), contract prices and discount rates. Level 3 inputs consists of expected power prices for delivery periods which there is no observable market price: • Nordic system price for delivery periods beyond the next 10 calendar years, • Area prices for price areas in Norway for delivery periods beyond the next 3 calendar years, • Area prices for price areas in Sweden and Finland for delivery periods beyond the next 4 calendar years. The Group does not hold electricity deriva- tives with maturities beyond the next 10 cal- endar years at 31 December 2022, hence all level 3 derivatives are long term area price and EPAD forward contracts. Note 8 Fair value measurement of ﬁnancial instruments Part 4 – 4.3 Notes Elmera Group Annual report 2022 128 Assets and liabilities measured at fair value based on level 3 At 31 December 2022 NOK in thousands Assets Liabilities Total, net Opening balance 1 January 2022 12 368 11 968 400 Transferred to level 2 (465) (570) 105 Additions or derecognitions - - - Unrealised changes in value recognised in proﬁt or loss 148 093 141 265 6 828 Closing balance 31 December 2022 159 996 152 663 7 333 Net realised gain (+) / loss (-) recognised in proﬁt and loss 2022 - Sensitivity analysis of factors classiﬁed to level 3 NOK in thousands 10 % reduction 10 % increase Net eﬀect from power prices (1 798) 1 798 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. There has not been identiﬁed any signiﬁcant diﬀerence between fair value and carrying amout at 31 December 2022. Part 4 – 4.3 Notes Elmera Group Note 8 Fair value measurement of ﬁnancial instruments Annual report 2022 129 Note 9 Financial risk management objectives The Group classiﬁes the following categories of ﬁnancial risks: • Market risk • Credit risk • Liquidity risk 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. The electricity prices are aﬀected by the war in Ukraine and the transition to a low-emis- sion society. The EU’s climate targets and the phasing-out of fossil energy production, as well as a focus on renewable energy with a signiﬁcant wind power element, have made the European power market increas- ingly dependent on prevailing weather con- ditions. In a transition phase, and for as long as the war continues, higher power prices and greater ﬂuctuations than normal are expected. 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 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 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 (increased from 14 days in 2022). In the business segment the notice period is seven days. Volume sold on variable price products in the consumer segment decreased towards the end of 2022 as signiﬁcant numbers of customers migrated from variable to spot-priced products. The Group initiated sales stop of these contracts in the consumer segment and year-end 2022 this contract type represents less than 11% of the customers in the segment. A substantial 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 movement towards spot based products for new custom- ers. At the beginning of the year the majority of the 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 have been signiﬁcantly decreased in 2022, and will continue to decrease in 2023 and going forward as old ﬁxed price contracts expire. 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. Part 4 – 4.3 Notes Elmera Group Annual report 2022 130 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 7(c), are all variable rate facilities. In addition, interest rate risk is Note 9 Financial risk management objectives 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 18. 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 10. Part 4 – 4.3 Notes Elmera Group Annual report 2022 131 The group has the following derivative ﬁnancial instruments: NOK in thousands 2022 2021 Restated Derivative ﬁnancial assets Derivative ﬁnancial instruments at fair value through OCI Electricity derivatives - Hedge contracts 2 077 - Derivative ﬁnancial instruments at fair value through proﬁt or loss Electricity derivatives - Hedge contracts 2 745 315 1 451 547 Electricity derivatives - Customer contracts 1 486 276 531 220 Other derivatives - - Total derivative ﬁnancial assets 4 233 668 1 982 766 Derivative ﬁnancial liabilities Derivative ﬁnancial instruments at fair value through OCI Electricity derivatives - Hedge contracts 72 772 78 962 Derivative ﬁnancial instruments at fair value through proﬁt or loss Electricity derivatives - Hedge contracts 129 552 320 611 Electricity derivatives - Customer contracts 2 982 676 561 659 Other derivatives 328 1 245 Total derivative ﬁnancial liabilities 3 185 327 962 477 Note 9 Financial risk management objectives Part 4 – 4.3 Notes Elmera Group Annual report 2022 132 Note 9 Financial risk management objectives 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 2022, 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, see note 7. 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 busi- ness customers. Refer to note 7 for details of concentration of credit risk related to trade receivables. 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, in 2022 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 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 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 30-day payment term in Norway and 45-day payment term in Sweden and Finland. In addition, this agreement in Norway includes a right for the Group to postpone these payments for addi- tional 30 days if current cash in hand does not cover the liability. Details of additional undrawn facilities that the Group has at its disposal to further reduce liquidity risk are set out in note 7(c), Credit facilities. Part 4 – 4.3 Notes Elmera Group Annual report 2022 133 Part 4 – 4.3 Notes Elmera Group Note 9 Financial risk management objectives 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 monthly in arrear. Contractual maturities of non-derivative ﬁnancial liabilities 31 December 2022 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* 5 828 373 - - - - 5 828 373 5 828 373 Overdraft facilities - - - 534 112 - 534 112 534 112 Interest-bearing short term debt - - - 275 000 - 275 000 275 000 Interest-bearing long term debt - 23 425 70 275 632 475 - 726 175 722 869 Total 5 828 373 23 425 70 275 1 441 587 - 7 363 659 7 360 353 * 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 30 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 30 days if their current cash in hand does not cover the liability. The agreement expires in April 2024. At 31 December 2022, the interest bearing balance with Statkraft was NOKt 5 249 292 (31 December 2021 was NOKt 3 851 298). Contractual maturities of derivative ﬁnancial liabilities 31 December 2022 NOK in thousands Less than 1 month 1-3 months 3 months to 1 year 1-5 years 5+ years Total Carrying amount Electricity derivatives - Hedge contracts - 35 118 40 377 137 684 2 479 215 658 202 324 Electricity derivatives - Customer contracts - 530 303 1 112 370 1 426 042 54 140 3 122 855 2 982 676 Other derivatives 23 48 262 - - 333 328 Total 23 565 469 1 153 009 1 563 727 56 619 3 338 847 3 185 327 Annual report 2022 134 Note 10 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 (increased from 14 days in 2022). In the busi- ness segment the notice period is seven days. The group revised its risk management strat- egy and policy for power purchases in the Norwegian group entities in July 2021. In the revised strategy Elmera will seek to reduce price variability for a higher percentage of the future power purchases in Norway. This will support the commercial goal to reduce the number of price changes for the variable price products, at the same time acknowledg- ing 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 elec- tricity in all ﬁve Norwegian price areas. When a Nordic system price forward contract is des- ignated as a hedge instrument, the contract 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 accouting 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 does not designate system price forward contracts as hedging instruments for power purchases 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 contract. The Group’s strategy when hedging the future cash ﬂows related to power purchases in price areas NO1, NO2 and NO5 has in 2022 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. The accounting implications of hedge accounting for the period are summarised in the table below. Part 4 – 4.3 Notes Elmera Group Annual report 2022 135 Fair value of hedging instruments where hedge accounting is applied 31 December 2022 Fair value hedge instru- ment* Effective por- tion in OCI* Ineffectiveness in P&L* Hedged vol- ume Q1 2023** Hedged volume beyond Q1 2023** Cash ﬂow hedge of highly probable power purchase in price areas: South Norway (NO1, NO2, NO5) (71 809) (71 809) - 61 0 Trondheim (NO3) 2 099 2 103 (3) 29 1 Tromsø (NO4) (984) (983) (2) 8 1 Total derivatives - Cash ﬂow hedges (70 694) (70 689) (5) 98 2 Note 10 Hedge accounting 31 December 2021 Fair value hedge instru- ment* Effective por- tion in OCI* Ineffectiveness in P&L* Hedged vol- ume Q1 2022** Hedged volume beyond Q1 2022** Cash ﬂow hedge of highly probable power purchase in price areas: South Norway (NO1, NO2, NO5) (88 291) (88 291) - 451 22 Trondheim (NO3) 5 831 (2 744) 8 575 42 6 Tromsø (NO4) 3 498 (435) 3 933 16 2 Total derivatives - Cash ﬂow hedges (78 962) (91 470) 12 508 509 30 * NOK in thousands ** GWh in thousands Change in fair value of hedging instruments where hedge accounting is applied NOK in thousands 2022 2021 Cash ﬂow hedge of highly probable power purchase: Ineﬀective portion, recognised in P&L, total (12 513) 12 508 Eﬀective portion, recognised in OCI, total 20 781 (91 470) Change in fair value, total 8 268 (78 962) Eﬀective portion, recognised in OCI, net of tax (22 %) 16 209 (71 347) Ineﬀective portion of changes in fair value of designated hedging instruments are recognised to Direct cost of sales in the statement of proﬁt and 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. 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 2022 2021 Opening balance 1 January (71 347) - Eﬀective portion of unrealised change in fair value of hedging instruments (381 080) 51 765 Realised (gains) and losses reclassiﬁed to proﬁt or loss 401 862 (143 235) Deferred tax (4 572) 20 123 Closing balance 31 December (55 137) (71 347) Part 4 – 4.3 Notes Elmera Group Annual report 2022 136 Note 11 Personnel expenses NOK in thousands 2022 2021 Salaries 322 878 313 959 Social security 44 091 44 338 Pension expenses 40 298 41 678 Other beneﬁts 14 870 11 084 Gross personnel expenses 422 137 411 060 - Capitalised R&D costs (1 109) (1 937) Total personnel expenses 421 029 409 123 Number of full-time equivalents (FTEs) as of 31 December 412 475 For information regarding pension schemes please refer to note 18. For information regarding management option program please refer to note 27. For information regarding remuneration to executive management and Board of Directors please refer to note 23. Part 4 – 4.3 Notes Elmera Group Annual report 2022 137 Note 12 Other operating expenses and other financial items 12(a) Other operating expenses Other operating expenses NOK in thousands 2022 2021 Sales and marketing costs 135 526 129 938 IT cost 134 331 103 307 Purchase of third- party services and external personnel 107 011 104 448 Net impairment expense on trade receivables and other losses 35 317 (21 113) Professional fees * 93 184 113 995 Other operating costs 69 577 57 941 Total other operating expenses 574 946 488 517 * Includes legal fees, auditor, consultants Auditor’s remuneration NOK in thousands 2022 2021 Statutory audit - Deloitte 3 884 4 149 Other assurance services - Deloitte 618 623 Other non-assurance services - Deloitte 235 - Total 4 736 4 773 12(b) Other ﬁnancial items, net NOK in thousands 2022 2021 Foreign exchange gain/(losses) (3 351) (9 561) Other ﬁnancial expenses (9 311) (9 657) Total other ﬁnancial items, net (12 660) (19 219) Part 4 – 4.3 Notes Elmera Group Annual report 2022 138 Note 13 Income tax Speciﬁcation of tax expense recognised in statement of proﬁt or loss NOK in thousands 2022 2021 Restated Tax payable on proﬁt for the year 64 831 87 570 Adjustments to prior years tax payable (208) 3 188 Adjustments to prior years deferred tax expense (income) 208 (6 712) Change in deferred tax/(tax asset) from origination and reversal of temporary diﬀerences (9 986) (5 880) Tax expense recognised in statement of proﬁt or loss 54 846 78 166 Speciﬁcation of current income tax liabilities NOK in thousands 2022 2021 Restated Tax payable on proﬁt for the year 64 831 87 570 Adjustments prior years tax payable (14 325) 6 713 Current income tax liabilities recognised in balance sheet 50 506 94 283 Reconciliation of statutory tax rate to effective tax rate: NOK in thousands 2022 2021 Restated Proﬁt before tax 128 692 335 195 Income tax at statutory tax rate (22%) 28 312 73 743 Tax expense recognised in statement of proﬁt or loss 54 846 78 166 Difference (26 533) (4 423) Permanent diﬀerences 3 107 1 945 Change in deferred tax/(tax asset) from change in valuation allowance for deferred tax assets 23 442 7 446 Adjustments prior years tax payable (15) (4 968) Difference 26 533 4 423 Part 4 – 4.3 Notes Elmera Group Annual report 2022 139 Note 13 Income tax Speciﬁcation of basis for deferred tax NOK in thousands 2022 Norway 2022 Sweden & Finland 2022 Total 2021 Total Restated Fixed assets/intangible assets 286 815 149 205 436 020 530 557 Receivables (33 617) - (33 617) (23 860) Pension liabilities (62 185) - (62 185) (93 837) Cost to obtain contracts 192 420 - 192 420 198 668 Provisions for onerous contracts (48 956) (1 020 619) (1 069 575) (1 083 854) Other current liabilities (5 115) - (5 115) (5 358) Derivative ﬁnancial instruments 34 359 1 013 844 1 048 203 1 020 246 Leasing liabilities (3 530) (36) (3 566) (3 509) Other 6 322 - 6 322 17 449 Losses carried forward (42) (2 005 443) (2 005 484) (2 018 659) Temporary differences 366 471 (1 863 049) (1 496 578) (1 462 156) Tax rate 22% 20,6% / 20% Deferred tax/(tax asset) 80 624 (383 889) (303 265) (295 873) Valuation allowance for deferred tax assets* - 368 555 368 555 364 401 Deferred tax asset recognised in statement of ﬁnancial position - 34 990 34 990 35 092 Deferred tax recognised in statement of ﬁnancial position 80 624 19 656 100 280 103 620 Net position (80 624) 15 334 (65 290) (68 528) * 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 22 870) and Finland (NOKt 12 121), 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 2022. Of the unrecognised deferred tax assets, NOKt 374 307relates to losses carried forward in Sweden and NOKt 3 360 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 2013 and 2022. Utilisation of the tax losses in Sweden is without time limitation. Part 4 – 4.3 Notes Elmera Group Annual report 2022 140 Changes in deferred tax balances Changes recognised in statement of proﬁt or loss Changes recognised in other comprehen- sive income Changes from business combinations 2022 NOK in thousands 1 January 2022 31 December 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 in statement of proﬁt or loss Changes recognised in other comprehen- sive income Changes from business combinations 2021 Restated NOK in thousands 1 January 2021 31 December 2021 Fixed assets/intangible assets 142 043 (38 985) (1 002) - 102 056 Receivables (7 635) 2 386 - - (5 249) Pension liabilities (24 382) (1 220) 4 958 - (20 644) Cost to obtain contracts 29 655 14 052 - - 43 707 Provisions for onerous contracts - (8 541) - - (8 541) Other current liabilities (10 538) 9 360 - - (1 179) Derivative ﬁnancial instruments (794) 11 355 (20 123) - (9 563) Leasing liabilities (676) (87) - - (763) Other assets 4 725 (886) - - 3 839 Losses carried forward (44 045) 6 685 2 224 - (35 136) Total 88 351 (5 880) (13 943) - 68 528 Note 13 Income tax Part 4 – 4.3 Notes Elmera Group Annual report 2022 141 Note 14 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 2022 2021 Restated Proﬁt/(loss) attributable to equity holders of the company (NOK in thousands) 73 847 257 029 Total comprehensive income attributable to equity holders of the company (NOK in thousands) 92 911 146 686 Weighted average number of ordinary shares outstanding 110 833 229 114 291 767 Earnings per share in NOK 0,67 2,25 Total comprehensive income per share in NOK 0,84 1,28 Share options (see note 27) 1 710 000 1 500 000 Diluted earnings per share in NOK 0,66 2,22 Dividend per share in NOK 3,50 3,50 Part 4 – 4.3 Notes Elmera Group Annual report 2022 142 Part 4 – 4.3 Notes Elmera Group 2022 NOK in thousands Fixtures and equipment Computer equipment Construction in progress Total 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) - (37 848) Depreciation for the year (2 240) (954) - (3 194) Currency translation diﬀerence 10 15 - 25 Accumulated depreciation 31 December 2022 (14 226) (26 790) - (41 017) Carrying amount 31 December 2022 5 087 3 023 90 8 198 2021 NOK in thousands Fixtures and equipment Computer equipment Construction in progress Total Accumulated cost 1 January 2021 16 830 26 613 - 43 443 Additions 70 738 1 917 2 725 Transferred from construction in progress 1 885 - (1 885) - Currency translation diﬀerence (131) (91) - (222) Accumulated cost 31 December 2021 18 653 27 260 33 45 946 Accumulated depreciation 1 January 2021 (9 846) (25 187) - (35 034) Depreciation for the year (2 164) (678) - (2 842) Currency translation diﬀerence 15 13 - 28 Accumulated depreciation 31 December 2021 (11 996) (25 852) - (37 848) Carrying amount 31 December 2021 6 658 1 408 33 8 098 Useful life 8 years (or lease term if shorter) 3 years Depreciation method Straight line Straight line The Group has no stranded assets. Note 15 Property, plant and equipment Annual report 2022 143 Note 16 Intangible assets Non-current intangible assets 2022 NOK in thousands Software and development projects Construction in progress Customer portfolios Fixed price customer contracts** Other intangible assets Totalt non-cur- rent intangible assets excl. Goodwill Goodwill Total non-current intangible assets Accumulated cost 1 January 2022 345 582 5 339 796 218 229 668 145 607 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) Currency translation diﬀerences 136 (143) 3 446 3 901 281 7 621 (675) 6 946 Accumulated cost 31 December 2022 382 472 9 446 799 668 233 569 145 888 1 571 044 1 418 775 2 989 819 Accumulated depreciation 1 January 2022 (221 534) - (321 346) (49 842) (32 514) (625 236) - (625 237) Depreciation for the year (47 861) - (123 977) - (8 726) (180 565) - (180 565) Currency translation diﬀerences (131) - (337) (847) - (1 315) - (1 315) Accumulated depreciation 31 December 2022 (269 527) - (445 660) (50 688) (41 240) (807 116) - (807 117) Accumulated impairment 1 January 2022 (22 724) - - (179 826) - (202 550) - (202 550) Impairment for the year - - - - - - - - Currency translation diﬀerences - - - (3 054) - (3 054) - (3 054) Accumulated impairment 31 December 2022 (22 724) - - (182 881) - (205 604) - (205 604) 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*/ straight line Other** Straight line * Depreciations for the majority of customer portfolios is calculated on basis of expected churn-proﬁle of the customer portfolio ** Refer note 19 for more information regarding depreciation and impairment of ﬁxed price customer contracts. Part 4 – 4.3 Notes Elmera Group Annual report 2022 144 Note 16 Intangible assets Non-current intangible assets 2021 NOK in thousands Software and development projects Construction in progress Customer portfolios**** Fixed price customer contracts** Other intangi- ble assets Totalt non-cur- rent intangible assets excl. Goodwill Goodwill Total non-cur- rent intangible assets Accumulated cost 1 January 2021 297 473 9 063 770 256 243 640 147 531 1 467 963 1 442 849 2 910 813 Additions - Purchase 889 41 655 38 784 - - 81 328 - 81 328 Additions - Internally generated 1 811 86 - - - 1 897 - 1 897 Additions from business combinations*** - - - - - - (4 802) (4 802) Transferred from construction in progress 45 456 (45 456) - - - - - - Currency translation diﬀerences (47) (8) (12 823) (13 972) (1 924) (28 773) (18 596) (47 369) Accumulated cost 31 December 2021 345 582 5 339 796 218 229 668 145 607 1 522 414 1 419 451 2 941 866 Accumulated depreciation 1 January 2021 (176 096) - (149 408) (52 761) (17 383) (395 648) - (395 648) Depreciation for the year (45 401) - (173 251) - (15 131) (233 783) - (233 783) Currency translation diﬀerences (37) - 1 312 2 919 - 4 195 - 4 195 Accumulated depreciation 31 December 2021 (221 534) - (321 346) (49 842) (32 514) (625 236) - (625 237) Accumulated impairment 1 January 2021 (22 724) - - (180 026) - (202 750) - (202 750) Impairment for the year - - - (9 762) - (9 762) (9 762) Currency translation diﬀerences - - - 9 961 - 9 961 9 961 Accumulated impairment 31 December 2021 (22 724) - - (179 826) - (202 550) - (202 550) Carrying amount 31 December 2021 101 324 5 339 474 873 0 113 093 694 630 1 419 451 2 114 081 Useful life 3 years 2-12 years Up to 5 years 3 years Depreciation method Straight line Other*/ straight line Other** Straight line * Depreciations for the majority of customer portfolios is calculated on basis of expected churn-proﬁle of the customer portfolio ** Refer note 19 for more information regarding depreciation and impairment of ﬁxed price customer contracts. *** The changes to Goodwill included in Additions from business combinations are adjustments to the goodwill recognised when the group acquired Innlandskraft AS and Troms Kraft Strøm AS in 2020. These changes are mainly caused by adjustments to the ﬁnal purchase consideration. **** Of total additions of customer portfolios, NOKt 37 348 relates to the acquisition of Skymobil AS’ portfolio of mobile customers. The amount comprises the purchase price for the portfolio and directly attributable costs. Part 4 – 4.3 Notes Elmera Group Annual report 2022 145 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 2022 in accordance with IAS 36, using the methods outlined in note 2. Goodwill as at 31 December 2022, has a total carrying value of NOKt 1 418 775 and intangible assets with indeﬁnite useful life has a total carrying value of NOKt 84 772. The allocation, for impairment-testing purposes, on cash-generating units of the signiﬁcant amounts is shown in the table below: NOK in thousands Goodwill Intangible assets with indeﬁnite useful life Consumer segment 771 012 42 017 Business segment 353 235 19 250 Nordic segment 294 528 23 505 Total 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 10,2 % and estimated growth rate in the terminal year was set at nominal 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 12,0 % for Sweden and 12,1 % for Finland. Estimated growth rate in the terminal year was set at nominal 1,0 %. Compound annual growth rate for net revenue was set at 12,0 % and compound annual growth rate for operating expenditure was set at 4,7 % in the period 2024- 2027. Growth rates are calculated from 2024 as net revenue in 2023 is estimated to be signiﬁcantly aﬀected by unproﬁtable ﬁxed price customer contracts where a substantial proportion expires in 2023. For goodwill and intangible assets with indeﬁnite useful life allocated to the Nordic segment, the calculated recoverable amount exceeds the carrying amount by NOKt 41 543. An increase in WACC by 0,64 percentage points, a reduction in compound annual growth rate for net revenue of 1,1 percentage points or an increase compound annual growth rate for operating expenditure of 2,4 percentage points would decrease the recoverable amount below the carrying amount. The key assumptions used in the estimates are associated with uncertainty, as the electricity markets in Sweden and Finland are transitioning towards spot based products following the increased price volatility and peak/oﬀ-peak price diﬀerences. Note 16 Intangible assets Part 4 – 4.3 Notes Elmera Group Annual report 2022 146 Note 16 Intangible assets Part 4 – 4.3 Notes Elmera Group Current intangible assets 2022 NOK in thousands El-certiﬁcates Guarantees of origination Carbon credits Total current 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 2021 NOK in thousands El-certiﬁcates Guarantees of origination Total current intangible assets Total current intangible assets Accumulated cost 1 January 2021 272 2 608 - 2 880 Additions - Purchase 86 044 11 206 498 97 748 Disposals* (85 898) (7 028) (184) (93 110) Accumulated cost 31 December 2021 417 6 786 314 7 518 Carrying amount 31 December 2021 417 6 786 314 7 518 * Disposals of El-certiﬁcates refers to amount of certiﬁcates being handed over to the government to oﬀset el-certiﬁcate cancellation liability. Disposals of Guarantees of origination (GoO) refers to amount of certiﬁcates redeemed as evidence of the origin of electricity generated from renewable energy sources. 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 60 128, NOKt 19 124 has been expensed as other operating expenses and NOKt 41 004 has been recognized as R&D assets. 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 and ENOVA) in 2022. 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 an app that gives consumers an overview of their power consumption. The total grants of NOK 1 308 thousand has been booked as a reduction of the cost price of the related assets. Annual report 2022 147 Note 17 Share capital Shareholders at 31 December 2022 Number of shares Nominal Nominal value Voting rights Ownership Folketrygdfondet 10 182 840 0,30 3 054 852 9,37 % 8,90 % Gudbrandsdal Energi Holding AS 7 682 161 0,30 2 304 648 7,07 % 6,72 % Verdipapirfondet Nordea Norge Verd 4 596 744 0,30 1 379 023 4,23 % 4,02 % Rieber & Søn AS 3 946 969 0,30 1 184 091 3,63 % 3,45 % Vpf Dnb Am Norske Aksjer 3 238 318 0,30 971 495 2,98 % 2,83 % Verdipapirfondet Holberg Norge 3 000 000 0,30 900 000 2,76 % 2,62 % Landkreditt Utbytte 3 000 000 0,30 900 000 2,76 % 2,62 % Verdipapirfondet Dnb Norge 2 547 863 0,30 764 359 2,35 % 2,23 % Perestroika AS 2 501 394 0,30 750 418 2,30 % 2,19 % Hsbc Bank Plc 2 129 093 0,30 638 728 1,96 % 1,86 % Geveran Trading Co Ltd 2 044 000 0,30 613 200 1,88 % 1,79 % The Bank Of New York Mellon Sa/Nv 1 942 516 0,30 582 755 1,79 % 1,70 % Verdipapirfondet Dnb Smb 1 867 442 0,30 560 233 1,72 % 1,63 % Nordnet Bank AB 1 592 812 0,30 477 844 1,47 % 1,39 % Verdipapirfondet Nordea Avkastning 1 509 527 0,30 452 858 1,39 % 1,32 % J.P. Morgan Se 1 385 968 0,30 415 790 1,28 % 1,21 % Clearstream Banking S.A. 1 338 344 0,30 401 503 1,23 % 1,17 % Melesio Invest AS 1 064 840 0,30 319 452 0,98 % 0,93 % Varde Norge AS 1 050 000 0,30 315 000 0,97 % 0,92 % Catilina Invest AS 1 023 720 0,30 307 116 0,94 % 0,90 % Others 50 989 659 0,30 15 296 898 46,94 % 44,59 % Total outstanding shares 108 634 210 32 590 263 100 % 95 % Treasury shares 5 717 590 0,30 1 715 277 0,00 % 5,00 % 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 2021 32 590 993 294 1 025 884 31 December 2020 34 291 992 094 1 026 385 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. For computation of earning per share and diluted earning per share see Note 14. Part 4 – 4.3 Notes Elmera Group Annual report 2022 148 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. 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 2022 Number of shares Number of options Rolf Barmen (Chief Executive Oﬃcer) 59 052 240 000 Henning Nordgulen (Chief Financial Oﬃcer)1 50 000 - Roger Finnanger (Head of Business) 3 378 120 000 Arnstein Flaskerud (Head of Strategy and M&A) 40 760 120 000 Solfrid K. Aase (Head of Service Companies) 11 156 120 000 Solfrid Fluge Andersen (Head of Operations) 5 171 120 000 Per Heiberg-Andersen (Head of Nordic and other end-user companies) 5 000 80 000 Marius Sveipe (Chief Executive Oﬃcer, Gudbrandsdal Energi AS)2 500 10 000 Magnar Øyhovden (Chief Executive Oﬃcer, Fjordkraft AS)3 44 600 20 000 Birte Strander (Chief Financial Oﬃcer)4 35 894 120 000 Jeanne K. Tjomsland (Head of HR, Communications and Sustainability)5 26 028 80 000 Christian Kalvenes (Head of Consumer)6 931 60 000 Alf-Kåre Hjartnes (Chief Operating Oﬃcer)5 8 833 50 000 Steinar Sønsteby (Chairman of the Board) 16 129 - Live Bertha Haukvik (Boardmember) 5 000 - Heidi Theresa Ose (Boardmember) 1 500 - Tone Wille (Boardmember) - - Per Oluf Solbraa (Boardmember) - - Marianne Unhjem (Boardmember, Employee representative) - - Elisabeth M. Norberg (Boardmember, Employee representative) 3 325 - Frank Økland (Boardmember, Employee representative) 645 - Total 317 902 1 140 000 Terms and details for the management option program are outlined in note 27. 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 Note 17 Share capital Part 4 – 4.3 Notes Elmera Group Annual report 2022 149 Part 4 – 4.3 Notes Elmera Group Note 18 Pension liabilities 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 cal- culated 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 the Norwegian group entities Until the end of 2019 the Norwegian group entities had a single deﬁned beneﬁt pension 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 members. Members who were enrolled in the deﬁned contribution pension plan received a paid-up policy for earned entitlements 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 for the employees in the companies Eidsiva Marked AS and Gudbrandsdal Energi AS. Eidsiva Marked AS was merged into Fjordkraft AS in 2021. Deﬁned contribution plan covering empoyees in Elmera Group ASA, Fjordkraft AS and Allrate AS At the end of 2022 the group companies Elmera Group ASA, Fjordkraft AS and AllRate AS have a deﬁned contribution pension scheme covering a total of 333 active mem- bers. The contribution rates for the deﬁned contribution plan are set to 5 per cent of sal- aries between 0 and 7,1 times G (where G is the National Insurance scheme basic amount, NOKt 111 in 2022), 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 plan, entiteling them to additional annual contribution for salary exceeding 12 G. Description of the 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 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 The subsidiary Gudbrandsdal Energi AS have deﬁned contribution pension schemes which at the end of 2022 are covering 24 active members. The contribution rates for the deﬁned contribution plans are 6 per cent of salaries between 0 and 7,1 times G (where G is the National Insurance scheme basic amount, NOKt 111 in 2021), and 25,1 per cent of salaries between 7,1 and 12 times G. The pension schemes includes retirement pension, disability pension, spouse’s pension and children’s pension. Deﬁned beneﬁt plans in BKK Pensjonskasse At the end of 2022 the deﬁned beneﬁt pen- sion scheme in BKK Pensjonskasse covers 13 active members, 97 pensioners and 539 deferred vested members.These numbers 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 pension, spouse’s pension and children’s pension. 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 Annual report 2022 150 covers a total of 21 active members and 3 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 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 beneﬁts if the employees are at least 67 years old at retirement. The scheme covers a total of 29 active members and 0 pensioners at the end of 2022. Deﬁned beneﬁt plans in KLP The deﬁned beneﬁt plans in KLP is cover- ing employees in Gudbrandsdal Energi AS. These deﬁned beneﬁt plans were closed to new members from July 2016. These funded schemes are public occupational pension schemes that ensures the pensioner 66% of ﬁnal salary upon 30 years of service. Retirement age is 67 years. At the end of 2022 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 transferred from KLP to BKK Pensjonskasse in 2022. Pension schemes in Switch Nordic Green AB The following pension schemes are appli- cable for the employees in SNG, who are either employed in Sweden or at the branch in Finland. Deﬁned contribution plans Employees at SNG in Sweden are members of Note 18 Pension liabilities a deﬁned contribution plan which at the end of 2022 are covering a total of 8 active members. The contribution rates for the deﬁned contri- bution plan are set to 5 per cent of salaries up until 7,5 times the Swedish Inkomstbasbelopp (IBB = The Swedish National Insurance scheme basic amount, where one IBB equals NOKt 67 in 2022), and 30 per cent of salaries between 7,5 and 30 times the IBB. The pen- sion scheme includes retirement pension and disability pension. Employees at SNGs branch in Finland are members of a statutory pension plan (TyEL) which includes retirement pension and dis- ability pension and at the end of 2022 are covering a total of 61 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 25,85 per cent of salaries, which includes the employ- ee’s share of the contribution that was 7,15 per cent at the end of 2022. Senior manage- ment in SNG Finland are entitled to additional deﬁned contributions. Risk exposure Through its deﬁned beneﬁt occupational pen- sion plans, the Group is exposed to a num- ber 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. As the plans mature, the Group 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 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 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 sensitivity analysis of the most signiﬁcant assumptions is enclosed. Part 4 – 4.3 Notes Elmera Group Annual report 2022 151 Note 18 Pension liabilities Amounts recognised in statement of ﬁnancial position: NOK in thousands 31 December 2022 31 December 2021 Present value of funded obligations 361 631 361 192 Fair value of plan assets 355 132 345 243 Deﬁcit for funded plans 6 499 15 949 Present value of unfunded obligations 64 211 73 785 Total deﬁcit of deﬁned beneﬁt pension plans 70 709 89 734 Other employee beneﬁt obligations 4 893 4 103 Employee beneﬁt obligations recognised in Statement of ﬁnancial position 75 602 93 837 Presentation in statement of ﬁnancial position: Net plan assets of deﬁned beneﬁt pension plans 4 178 - Net employee deﬁned beneﬁt plan liabilities 79 780 93 837 Employee beneﬁt obligations recognised in Statement of ﬁnancial position, net 75 602 93 837 Part 4 – 4.3 Notes Elmera Group Annual report 2022 152 Amounts recognised in statement of proﬁt or loss: 2022 NOK in thousands Funded obligations Non-funded obligations Total 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 2021 NOK in thousands Funded obligations Non-funded obligations Total Accrued pension entitlement for the year 3 626 3 577 7 203 Payroll tax (PT) 568 509 1 077 Net interest expense / (income) 5 175 960 6 135 Expected return on plan assets (4 605) - (4 605) Expenses paid 187 - 187 Members' contribution (200) - (200) Total amount recognised in proﬁt or loss 4 751 5 046 9 797 Note 18 Pension liabilities Part 4 – 4.3 Notes Elmera Group Annual report 2022 153 Note 18 Pension liabilities Change in deﬁned beneﬁt obligation: NOK in thousands Present value of funded obligation Fair value of plan assets Total, funded obligations, net of plan assets Present value of non-funded obligation Total, net 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) 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 NOK in thousands Present value of obligation Fair value of plan assets Total, funded obligations, net of plan assets Present value of non-funded obligation Total, net At 1 January 2021 349 079 304 808 44 271 64 165 108 436 Accrued pension entitlement for the year 3 626 - 3 626 3 577 7 203 Payroll tax (PT) 568 - 568 509 1 077 Interest expense (income) 5 175 - 5 175 960 6 135 Return on plan assets - 4 605 (4 605) - (4 605) Past service cost - - - - - Actuarial gains and losses 10 364 37 475 (27 110) 4 575 (22 536) Beneﬁts paid (6 902) (6 902) - - - Contribution - 5 245 (5 245) - (5 245) Members' contribution - 200 (200) - (200) Expenses paid - (187) 187 - 187 Payroll tax of contribution (719) - (719) - (719) At 31 December 2021 361 192 345 243 15 949 73 785 89 734 Part 4 – 4.3 Notes Elmera Group Annual report 2022 154 Note 18 Pension liabilities Actuarial gains and losses recognised directly in Other comprehensive income (OCI) NOK in thousands 2022 2021 Net actuarial gains/(losses) recognised in OCI during the year 3 610 17 577 Tax eﬀects of actuarial gains/(losses) recognised in OCI 1 018 4 958 Signiﬁcant actuarial assumptions 2022 2021 Discount rate 3,60 % 1,70 % Salary growth rate 3,75 % 2,50 % Expected growth in base social security amount (G) 3,50 % 2,25 % Estimated return on plan assets 3,60 % 1,70 % Pension growth rate 2,75 % 1,50 % 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 yr - 60 yr - 2,0 % Afte 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 (746) 955 (76 650) 102 473 Salary growth rate 301 (274) 6 185 (5 597) Expected growth in base social security amount (G) 625 (519) 95 634 (73 039) Part 4 – 4.3 Notes Elmera Group Annual report 2022 155 Note 18 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 2022 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 48 977 84 630 44 680 178 287 50% Interest bearing instruments 12 457 160 594 1 078 174 129 49% Real estate - - 2 715 2 715 1% Total investments 61 434 245 224 48 473 355 132 100% 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 2022 156 Note 19 Onerous contract provisions Fixed price customer contracts The Group has signiﬁcant 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 16), 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 2022 31 December 2021 Restated Onerous contract provisions - Non-current 784 239 337 135 Onerous contract provisions - Current 285 336 751 893 Onerous contract provisions - Total 1 069 575 1 089 027 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 2022 2021 Restated Opening balance 1 January 1 089 027 78 515 Release of provisions (1 018 751) (74 778) New and changed provisions 1 019 102 1 088 790 Currency translation diﬀerence (19 804) (3 500) Closing balance 31 December 1 069 575 1 089 027 Part 4 – 4.3 Notes Elmera Group Annual report 2022 157 Financial statement impact of unrealised gains/losses: 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 Note 2022 2021 Restated Impairment and provisions for onerous contracts: Change in provisions for onerous contracts 39 256 (1 019 479) Depreciation of intangible assets - Fixed price customer contracts 16 - - Impairment of intangible assets - Fixed price customer contracts 16 - (9 762) Impairment of cost to obtain contracts (39 282) - Total depreciation, impairment and provisions for onerous contracts: (26) (1 029 241) Unrealised gains and losses on derivatives related to ﬁxed price customer contracts (6 439) 1 029 510 Net unrealised gain/loss recognised in statement of proﬁt or loss (6 465) 269 As a result of increased forward market prices of electrical power in 2020 and 2021, indicators of impairment was identiﬁed, and impairment charges were rec- ognised to the ﬁxed price customer contracts recognised as intangible assets in the statement of ﬁnancial position. As these intangible assets were fully impaired in 2021, there has been no further depreciation or impairment charges in 2022. 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 has increased signiﬁcantly in 2022. The volume of ﬁxed price power contracts have decreased however, due to a movement towards spot based products for new customers and existing ﬁxed price customer contracts being delivered. In total, these eﬀects has lead to a slight 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, has lead to high proﬁle costs. Expectations of high proﬁle costs going forward causes negative estimated margins on some ﬁxed price customer contracts in the Nordic segment, leading to a corresponding impairment of the cost to obtain these contracts. The net impact in the statement of proﬁt or loss, which is an unrealised net loss in 2022 of NOKt 6 465 (2021: NOKt 269 net gain) is mainly caused by (negative) 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 derivatives related to ﬁxed price customer contracts are both presented as Direct cost of sales in the statement of proﬁt or loss, while impairment of cost to obtain contracts is presented on a separate line. Note 19 Onerous contract provisions Part 4 – 4.3 Notes Elmera Group Annual report 2022 158 Note 20 Other current liabilities NOK in thousands Note 2022 2021 Restated El-certiﬁcate cancellation liabilities 9 641 16 628 Accrued power purchase 731 799 407 428 Prepayments from customers 46 656 56 948 Instalments on long term loan due within 12 months 7 93 700 93 700 Payroll liabilities 58 537 57 727 Other 26 594 11 436 Total Other current liabilities 966 927 643 868 Note 21 Other current assets Other current assets consists of the following: NOK in thousands 2022 2021 VAT receivable 5 901 - Other prepaid costs 58 128 37 419 Prepaid taxes 1 996 1 427 Total other current assets 66 025 38 847 Part 4 – 4.3 Notes Elmera Group Annual report 2022 159 Note 22 Related party transactions As at 31 December 2022, the Group’s related parties include Board of Directors and key management. Transactions related to these groups are disclosed in note 23. The Board of Directors previously included a representative from former major shareholder Eviny AS (previous BKK AS). In the general meeting held in the second quarter of 2021, this board member was not re-elected. Eviny AS and subsidiaries were therefore considered to be related parties in the ﬁrst two quarters of 2021, but not as of 30 June 2021. 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 2022 2021 Eviny AS and subsidiaries Major shareholder Sale of electrical power - 31 131 Sale of electrial power includes in some cases reinvoiced grid rent. Expenses to related parties (NOK in thousands) Related party Relation Purpose of transactions 2022 2021 Eviny AS and subsidiaries Major shareholder Purchase of electrical power - 6 588 Eviny AS and subsidiaries Major shareholder Purchase of other services - 12 726 Metzum AS Associated company Purchase of other services 38 500 38 743 Atea AS Other* Purchase of products and other services 9 922 8 853 Other services consists of payroll expenses, IT, oﬃce expenses and customer service. Purchase of assets (NOK in thousands) Related party Relation Purpose of transactions 2022 2021 Eviny AS and subsidiaries Major shareholder Purchase of customer portfolio - 181 Metzum AS Associated company Research and development 2 666 8 284 Atea AS Other* Products and development 481 4 077 Current liabilities to related parties (NOK in thousands) Related party Relation 31 December 2022 31 December 2021 Metzum AS Associated company Research and development 959 1 411 Atea AS Other* Products and development 138 1 956 * The chairman of the Board of Directors in Elmera Group ASA is the CEO of Atea ASA. Payables to related parties are unsecured and are expected to be settled in cash. Part 4 – 4.3 Notes Elmera Group Annual report 2022 160 Note 23 Remuneration to the Executive management and Board of Directors Executive management 2022: NOK in thousands Salary Bonus Other beneﬁts Pension costs Total remuneration 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 1 101 995 3 194 22 711 584 *In 2022 the CEO received a discretionary bonus of NOKt 500 based on the Group’s performance in 2021. In 2022 the Board of Directors have awarded the CEO a discretionary bonus of NOKt 375 based on the Group’s performance, paid in 2023. Part 4 – 4.3 Notes Elmera Group Executive management 2021: NOK in thousands Salary Bonus Other beneﬁts Pension costs Total remuneration Loans outstanding 31 December Rolf Barmen (Chief Executive Oﬃcer) 3 231 1266* 150 724 5 371 354 Birte Strander (Chief Financial Oﬃcer) 1 743 261 120 392 2 516 - Jeanne K. Tjomsland (Head of HR & Communications) 1 721 261 120 374 2 475 - Arnstein Flaskerud (Head of Strategy and M&A) 1 878 261 120 326 2 585 - Solfrid K. Aase (Head of Service Companies) 1 565 261 100 285 2 210 - Christian Kalvenes (Head of Consumer) 1 565 209 100 170 2 043 - Ole Johan Langenes (Acting Chief Financial Oﬃcer) 7 644 209 42 71 965 - Alf-Kåre Hjartnes (Chief Operating Oﬃcer) 1 721 209 120 314 2 363 365 Roger Finnanger (Head of Business) 1 565 261 100 173 2 098 - Solfrid Fluge Andersen (Head of Operations) 1 565 209 100 173 2 046 - Per Heiberg-Andersen (Head of Nordics and other end-user companies) 1 565 170 100 169 2 003 - Total remuneration executive management 2021 18 759 3573 1172 3171 26 674 719 *In 2021 the CEO received a discretionary bonus of NOKt 1 266 based on the Group’s performances in 2020. In 2021 the Board of Directors have awarded the CEO a discretionary bonus of NOKt 500 based on the Group’s performance, paid in 2022. 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 7) Acting CFO from 1 January 2021 until 31 May 2021 due to maternity leave Remuneration included in the tables is valid for the period from/to the dates stated above. Annual report 2022 161 The members of the Board of Directors have received the following remuneration during the year ended 31 December 2022 and 2021: NOK in thousands 2022 2021 Steinar Sønsteby (Chairman)1 545 461 Per Axel Koch (Chairman)2 - 161 Live Bertha Haukvik (Boardmember) 401 383 Heidi Theresa Ose (Boardmember) 360 396 Tone Wille (Boardmember)1 312 212 Per Oluf Solbraa (Boardmember)1 312 212 Marianne Unhjem (Boardmember, Employee representative)1 108 73 Lindi Bucher Vinsand (Boardmember, Employee representative)2 - 32 Elisabeth M. Norberg (Boardmember, Employee representative) 108 104 Frank Økland (Boardmember, Employee representative) 108 104 Lisbet Nærø (Chairman of the Nomination committee) 53 52 Atle Kvamme (Member, Nomination committee) 32 31 Jannicke Hilland (Member, Nomination committe)3 - 9 Ragnhild Stolt-Nielsen (Member, Nomination committee) 32 22 Total remuneration Board of directors 2 371 2 252 1) From 21 April 2021. 2) Until 21 April 2021. 3) The remuneration is paid as a fee to BKK AS, and was for the period until 21 April 2021. Note 23 Remuneration to the Executive management and Board of Directors Part 4 – 4.3 Notes Elmera Group 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 peri- od, 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 per- centage point. Current limit for taxation of beneﬁts is 2,3 %. The CEO and Group management is included in the current pension plan for the Group - see note 18. Annual report 2022 162 Note 23 Remuneration to the Executive management and Board of Directors 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 Directorspension 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 Part 4 – 4.3 Notes Elmera Group Annual report 2022 163 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 allot- ment, (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 dismissal), the CEO is bound by the provi- sions 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. Note 23 Remuneration to the Executive management and Board of Directors Part 4 – 4.3 Notes Elmera Group Annual report 2022 164 Note 24 Collateral and restricted assets NOK in thousands Item in Statement of ﬁnancial position Note 31 December 2022 31 December 2021 Collateral Security over trade receivables 1) Trade receivables 7 7 138 260 4 842 012 Total collateral 7 138 260 4 842 012 Restricted assets Restricted cash - Payroll tax deductions Cash and cash equivalents 21 320 Total restricted assets 21 320 1) Trade receivables held by the Norwegian entities in the group are pledged as collateral for credit facilities - see note 7. Part 4 – 4.3 Notes Elmera Group Annual report 2022 165 Note 25 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 2022 2021 Non-current assets Right of use assets Property 64 769 80 253 Equipment 643 976 Cars 782 1 576 Total 66 195 82 806 Non-current liabilities Lease liability long term 49 477 65 259 Current liabilities Lease liability short term 20 284 21 055 Total 69 761 86 314 Additions to the right-of-use assets in 2022 were NOKt 3 692 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 2022 2021 Depreciation right-of-use assets Property 19 250 18 596 Equipment 333 333 Cars 720 757 Total 20 303 19 687 Interest expense lease liability 1 934 2 374 Expenses relating to short-term leases 1 400 1 678 Expenses relating to leases of low-value 1 320 136 The total cash outﬂow for leases in 2022 was NOKt 24 824 Part 4 – 4.3 Notes Elmera Group Annual report 2022 166 Part 4 – 4.3 Notes Elmera Group Year ended 31 December 2022 NOK in thousands Within 1 year Between 1 and 5 years More than 5 years Total Property 21 698 57 841 - 79 539 Equipment 355 330 - 685 Cars 736 92 - 828 Total 22 789 58 263 - 81 052 Variable lease payments The Group has variable lease payments in its property lease agreements. Variable lease payments consists of annual adjustements to lease payments based on the Consumer Price Index. Extention and termination options Extension and termination options are included in a number of property and equip- ment leases across the Group. These are used to maximise operational ﬂexibility in terms of managing the assets used in the Group’s operations. Maturity analysis The following table details the Group’s remain- ing contractual maturity for its leasing liabil- ities. The tables have been drawn based on the undiscounted cash ﬂows of instalments on leasing liabilities. Note 25 IFRS 16 Leases Annual report 2022 167 Note 26 List of subsidiaries The following subsidiaries are fully consolidated in the ﬁnancial statements as per 31 December 2022. Name of entity Place of business Ownership interest held by the Group Principal activities 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 Part 4 – 4.3 Notes Elmera Group Annual report 2022 168 Part 4 – 4.3 Notes Elmera Group Note 27 Option program Type Options Options Grant Date 9 February 2022 8 August 2022 Vesting conditions The options vest in one tranche with vesting 14 February 2025. The Employee must remain an employee of the Company or an aﬃliated company at the end of the vesting period. The options vest in one tranche with vesting 14 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 2028 14 February 2029 Exercise price (NOK) 37,00 21,50 Total number outstanding 370 000 20 000 Type Options Options Grant Date 9 February 2022 8 August 2022 Measurement date 9 February 2022 8 August 2022 Share price (NOK) 37,28 21,50 Lifetime* (years) 3,02 3,52 Volatility 30,00 % 37,47 % Risk-free interest rate* 1,92 % 2,73 % Fair Value* (NOK) 9,4212 5,8469 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 390 000 share options were issued to employees during 2022. *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 2022 is estimated at average of 30% 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 2022 is NOKt 14 946, not including social security Annual report 2022 169 Part 4 – 4.3 Notes Elmera Group Note 27 Option Program 01.01.2022 - 31.12.2022 01.01.2021 - 31.12.2021 Shares Weighted Average Exercise Price (NOK) Shares Weighted Average Exercise Price (NOK) Outstanding at the beginning of period 1 500 000 44,57 1 190 000 39,43 Granted 390 000 36,09 330 000 78,00 Exercised -50 000 24,30 (20 000) 24,30 Forfeited -130 000 52,58 - - Outstanding at the end of period 1 710 000 38,92 1 500 000 44,57 Vested outstanding 790 000 22,41 510 000 24,61 Vested and expected to vest 1 710 000 38,92 1 500 000 44,57 Intrinsic value of in-the-money outstanding at the end of the period - - 820 000 18 918 200 Intrinsic value vested outstanding at the end of the period - - 510 000 11 755 600 Outstanding instruments Vested outstanding Exercise price Outstanding per 31 December 2022 Weighted average re- maining Contractual Life Vested options per 31 December 2022 Weighted Average Exercise Price (NOK) 0,00 - 25,00 20 000 6,13 - - 25,00 - 30,00 - - - - 30,00 - 35,00 740 000 1,83 740 000 33 35,00 - 40,00 350 000 4,87 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 4,13 - - 70,00 - 330 000 4,76 20 000 79,7 Total 1 710 000 3,43 790 000 34,48 At 31 December 2021, 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 2021 and 2022: Period activity: Annual report 2022 170 Note 28 Investments in associates and joint ventures On 6 January 2020 Elmera Group and Rieber & Søn AS bought shares in Metzum AS. Each company bought 40% of the shares, the remaining 20% is owned by employees in Metzum. The purchase price for Elmera Group’s shares was NOKt 10 000, which corresponded to the book value of the acquired equity. As such, no excess value or Goodwill was identiﬁed from the acquisition. The share of proﬁt and loss and ﬁnancial position from investments in associates and joint ventures are recognised based on the equity method in the ﬁnancial statements. The table below presents the Group’s share of equity and proﬁt from associated companies: NOK in thousands Location Ownership/ voting right Equity 2022 (40%) Proﬁt 2022 (40%) Book value Metzum AS Dale, Norway 40 % 14 234 429 14 234 Note 29 Events after the reporting period The Board of Directors has in the Board Meeting on 15 February 2023 proposed a dividend to the shareholders of NOK 1.50 per share. The proposed dividend is subject to approval by the general meeting. The mobile business in Fjordkraft AS, a wholly owned subsidiary of Elmera Group ASA, will be demerged to a new entity Fjordkraft Mobil AS in Q1 2023. Elmera has entered into a share purchase agreement with Telia Company AB to sell 39 % of the shares Part 4 – 4.3 Notes Elmera Group in Fjordkraft Mobil AS, and the transaction is expected to be completed in Q1 2023. The purchase price which will be settled in cash, will be based on the number of successfully migrated mobile customer subscriptions, and is estimated to NOKt 120 000. There are no other significant events after the reporting period that has not been reﬂected in the consolidated ﬁnancial state- ments. Annual report 2022 171 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 2022 (Annual report 2022). 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 2022 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 2022 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. The Board of Directors of Elmera Group ASA, Bergen, 28 March 2023. Per Oluf Solbraa Board member Heidi Theresa Ose Board member Marianne Unhjem-Solbjørg Board member Elisabeth M. Norberg Board member Rolf Barmen CEO Frank Økland Board member Steinar Sønsteby Chairman Live Bertha Haukvik Board member Tone Wille Board member Part 4 – 4.3 Notes Elmera Group Annual report 2022 172 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 2022 173 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 liabil- ity - short term, and other current liabilities. First year instalments of interest-bearing long term debt, which are included in Other current liabilities, are however classiﬁed as interest bearing debt. The deﬁnition of NWC has been changed compared to the deﬁnition used in the group’s previous ﬁnancial reports, as Derivative ﬁnancial instruments and Onerous contract provisions are no longer included in NWC. The comparable ﬁgure for NWC 2021 has been updated accordingly. 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 2022 174 Financial statements with APM’s Reported amounts: NOK in thousands 2022 2021 Restated Revenue 25 521 514 15 075 445 Direct cost of sales (23 823 519) (13 357 147) Net revenue 1 697 995 1 718 299 Personnel expenses (421 029) (409 123) Other operating expenses (574 946) (488 517) Impairment of intangible assets and cost to obtain contracts (39 282) (9 762) Operating expenses (1 035 258) (907 401) EBITDA 662 737 810 898 Depreciation & amortisation (389 956) (403 084) EBIT reported (Operating proﬁt) 272 781 407 814 Net ﬁnancials (144 089) (72 619) Proﬁt/ (loss) before taxes 128 692 335 195 Taxes (54 845) (78 166) Proﬁt/ (loss) for the year 73 847 257 029 EBIT reported margin 16% 24% Alternative performance measures Part 4 – 4.3 Notes Elmera Group Annual report 2022 175 Adjusted amounts: NOK in thousands 2022 2021 Restated Net revenue 1 697 995 1 718 299 Other one- oﬀ items - - Unallocated revised net revenue - 64 169 Estimate deviations previous periods 4 472 (11 515) Unrealised gains and losses on derivatives 47 791 (1 066 055) Change in provisions for onerous contracts (39 256) 1 019 479 Net revenue adjusted 1 711 002 1 724 378 EBITDA 662 737 810 898 Acquisition related costs - 1 034 Other one- oﬀ items 2 660 (3 387) Unallocated revised net revenue - 64 169 Estimate deviations previous periods 4 472 (11 515) Impairment of intangible assets 39 282 9 762 Unrealised gains and losses on derivatives 47 791 (1 066 055) Change in provisions for onerous contracts (39 256) 1 019 479 EBITDA adjusted 717 685 824 385 EBIT reported (Operating proﬁt) 272 781 407 814 Acquisition related costs - 1 034 Other one- oﬀ items 2 660 (3 387) Unallocated revised net revenue - 64 169 Estimate deviations previous periods 4 472 (11 515) Impairment of intangible assets 39 282 9 762 Unrealised gains and losses on derivatives 47 791 (1 066 055) Change in provisions for onerous contracts (39 256) 1 019 479 Depreciation of acquisitions 132 323 188 629 EBIT adjusted 460 054 609 930 EBIT margin adjusted 27% 35% Alternative performance measures Part 4 – 4.3 Notes Elmera Group Annual report 2022 176 Net interest bearing debt (cash) NOK thousands 2022 2021 Interest-bearing long term debt 629 169 720 009 Interest-bearing short term debt 275 000 - Transaction costs recognised as part of amortised cost of Interest-bearing long term debt 3 306 6 166 Reclassiﬁcation of ﬁrst year instalments long term debt 93 700 93 700 Overdraft facilities 534 112 - Cash and cash equivalents (70 548) (306 627) Net interest bearing debt (cash) 1 464 739 513 248 Financial position related APM’s NOK thousands 2022 2021 Restated Net working capital (NWC)* 532 789 (66 847) OpFCF before tax and change in NWC 435 807 513 050 Capex excl. M&A 44 328 47 182 * The deﬁnition of NWC has been changed compared to the deﬁnition used in the group’s previous ﬁnancial reports. The comparable ﬁgure for NWC 2021 has been updated accordingly. Non-ﬁnancial APM’s Deliveries Numbers in thousands 2022 2021 Electrical deliveries Consumer segment 685 692 Electrical deliveries Business segment 120 111 Electrical deliveries Nordic segment 149 171 Total number of electrical deliveries* 954 975 Number of mobile subscriptions 144 160 * Number of deliveries excl. Extended Alliance deliveries. Number of deliveries incl. Extended Alliance deliveries: 1 041 thousand in 2022. Volume in GWh 2022 2021 Consumer segment 7 648 9 486 Business segment 6 978 7 478 Nordic segment 2 879 3 229 Total volume 17 506 20 193 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) 178 Statement of ﬁnancial position 179 Statement of changes in equity 181 Statement of cash ﬂows 182 Annual report 2022 177 Annual report 2022 178 Statement of comprehensive income (loss) NOK in thousands Note 2022 2021 Revenue 10 86 498 3 216 Direct cost of sales - - Personell expenses 3, 8 (53 181) (12 505) Operating expenses 4, 10 (78 805) (9 859) Depreciation and amortisation - (50) Operating proﬁt (45 488) (19 198) Income from investments in subsidiaries 6, 10 196 500 424 396 Interest income 10,13 8 008 4 290 Interest expense 13 (34 989) (21 344) Other ﬁnancial items, net (299) (246) Net ﬁnancial income/(cost) 169 220 407 096 Proﬁt/(loss) before tax 123 732 387 899 Income tax (expense)/income 5 (11 375) (5 946) Proﬁt/(loss) for the year 112 357 381 953 Other comprehensive income: Items that will not be reclassiﬁed to proﬁt or loss: Actuarial gain/(loss) on pension obligations (net of tax) 8 3 641 (141) Total other comprehensive income for the year, net of tax 3 641 (141) Total comprehensive income/(loss) for the year 115 998 381 812 Part 4 – 4.4 Financial statements Elmera Group ASA Annual report 2022 179 NOK in thousands Note 2022 2021 Assets: Non-current assets Investments in subsidiaries 6,13 2 285 307 2 285 307 Other non-current assets 9 286 12 529 Total non-current assets 2 294 593 2 297 836 Current assets Trade receivables 1 289 - Receivables from group companies 10, 13 1 265 247 684 833 Other current assets 13 666 - Cash and cash equivalents 13 - 222 348 Total current assets 1 280 201 907 182 Total assets 3 574 794 3 205 018 Equity and liabilities: Equity Share capital 7 32 590 34 291 Share premium 7 1 570 810 1 569 610 Other equity 40 419 213 868 Total equity 1 643 819 1 817 769 Non-current liabilities Employee beneﬁt obligations 8 16 801 5 762 Interest-bearing long term debt 13,14 307 194 350 334 Deferred tax liabilities 5 981 2 476 Total non-current liabilities 324 976 358 572 Statement of financial position Part 4 – 4.4 Financial statements Elmera Group ASA Annual report 2022 180 Statement of ﬁnancial position NOK in thousands Note 2022 2021 Current liabilities Trade and other payables 10,13,14 31 417 499 Liabilities to group companies 10,13,14 676 600 565 447 Overdraft facilities 13,14 534 112 - Interest-bearing short term debt 13,14 125 000 - Current income tax liabilities 5 13 896 10 851 Dividend payable 10 162 951 400 056 Social security and other taxes 8 023 4 920 Other current liabilities 9 54 001 46 903 Total current liabilities 1 606 000 1 028 677 Total liabilities 1 930 975 1 387 249 Total equity and liabilities 3 574 794 3 205 018 The Board of Directors of Elmera Group ASA, Bergen, 28 March 2023. Per Oluf Solbraa Board member Heidi Theresa Ose Board member Marianne Unhjem-Solbjørg Board member Elisabeth M. Norberg Board member Rolf Barmen CEO Frank Økland Board member Steinar Sønsteby Chairman Live Bertha Haukvik Board member Tone Wille Board member Part 4 – 4.4 Financial statements Elmera Group ASA Annual report 2022 181 NOK in thousands Issued capital Treasury shares Share premium Retained earnings Total equity Opening balance at 1 January 2021 34 285 - 1 569 130 228 203 1 831 618 Proﬁt/(loss) for the year - - - 381 953 381 953 Other comprehensive income - - - (141) (141) Share capital increase 6 - 480 - 486 Share-based payment (note 12) - - 3 910 3 910 Dividend - - - (400 056) (400 056) Closing balance 31 December 2021 34 291 - 1 569 610 213 868 1 817 769 Opening balance at 1 January 2022 34 291 - 1 569 610 213 868 1 817 769 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 Statement of changes in equity Part 4 – 4.4 Financial statements Elmera Group ASA Annual report 2022 182 NOK in thousands Note 2022 2021 Operating activites Proﬁt/(loss) before tax 123 732 387 899 Adjustments for: Depreciation - 50 Dividend recognised, not received 10 (196 500) (424 396) Share based payment expense 12 4 790 3 910 Change in post-employment liabilities, no cash eﬀect 8 (1 066) 1 257 Amortisation of transactions costs, no cash eﬀect 13a 8 210 8 426 Changes in working capital: Trade receivables 10 677 - Other current assets 3 106 1 127 Trade and other payables 10 (116 294) (986) Other current liabilities 9 10 200 (1 382) Income tax paid 5 (10 851) - Net cash from operating activities (173 996) (24 097) Investing activities Payment upon acquisition of subsidiaries - 2 494 Dividends received from subsidiary 10 424 396 454 822 Net (outﬂow)/proceeds from current loans to/from subsidiaries 10 (551 911) 269 160 Net (outﬂow)/proceeds from other long-term liabilities (1 807) (775) Net cash used in investing activities (129 321) 725 702 Financing activites Proceeds from overdraft facilities 13a 534 112 (29 400) Proceeds from revolving credit facility 13a 125 000 - Dividends paid 10 (400 231) (399 986) Proceeds from issuance of shares 1 215 486 Purchase of treasury shares 7 (132 827) - Transactions costs (credit facilities) paid 13a (300) (4 356) Instalments of long term debt 13a (46 000) (46 000) Net cash used in ﬁnancing activities 80 969 (479 256) Net change in cash and cash equivalents (222 348) 222 348 Cash and cash equivalents at 1 January 222 348 - Cash and cash equivalents at 31 December - 222 348 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 184 Note 2 Accounting policies 184 Note 3 Personnel expenses 185 Note 4 Operating expenses 185 Note 5 Income tax 186 Note 6 Investments in subsidiaries 187 Note 7 Share capital and shareholder information 187 Note 8 Pension liabilities 190 Note 9 Other current liabilities 193 Note 10 Related party transactions 194 Note 11 Remuneration to the Executive management and Board of Directors 196 Note 12 Option program 200 Note 13 Financial assets and ﬁnancial liabilities 202 Note 14 Financial risks 205 Note 15 Events after the reporting period 206 Annual report 2022 183 Annual report 2022 184 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 activities, including investment in other companies. Elmera Group ASA is registered and domi- ciled 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. As part of an internal group reorganisa- tion, overhead- and support-functions which previously were organised in the subsidiary Fjordkraft AS, have been transferred to Elmera Group ASA in 2022. This transfer was carried out as a transfer of business (“virksomhetsoverdragelse”) and included the transfer of 81 employees. 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 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 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. Part 4 – 4.5 Notes Elmera Group ASA Annual report 2022 185 Note 3 Personnel expenses NOK in thousands 2022 2021 Salaries 41 795 9 421 Social security 5 009 1 012 Pension expenses 3 641 1 160 Other beneﬁts 2 736 912 Total 53 181 12 505 Number of full-time equivalents (FTEs) as of 31 December 88 3 Salaries includes payments to Board of directors. See note 12. The change in FTE’s from 2021 includes 81 employees which where transferred from the subsidiary Fjordkraft AS as part of an internal group reorganisation in August 2022. Loans to employees NOK in thousands 2022 2021 Loans 294 354 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 2,30 %. Employee loans are handled by the subsidiary Fjordkraft AS. Note 4 Operating expenses NOK in thousands 2022 2021 Sales and marketing costs 1 173 69 IT costs 30 953 175 Purchase of third-party services and external personnel 8 845 6 398 Professional fees* 32 063 2 507 Other operating costs 5 771 710 Toal operating expenses 78 805 9 859 * includes legal fees, auditor, consultants Speciﬁcation of auditors remuneration (all related to services provided by Deloitte) NOK in thousands 2022 2021 Statutory audit 1 125 1 427 Tax advisory services 19 - Other non-audit related services 410 297 Total auditors remuneration 1 555 1 724 Part 4 – 4.5 Notes Elmera Group ASA Annual report 2022 186 Note 5 Income Tax Speciﬁcation of tax expense recognised in statement of proﬁt or loss NOK in thousands 2022 2021 Tax payable on proﬁt for the year 13 896 10 851 Adjustments prior years tax payable - (3 835) Change in deferred tax/(tax asset) from origination and reversal of temporary diﬀerences (2 521) (1 071) Tax expense/(-income) recognised in statement of proﬁt or loss 11 375 5 946 Speciﬁcation of tax expense recognised in other comprehensive income Change in deferred tax/(tax asset) from origination and reversal of temporary diﬀerences 1 027 (40) Tax expense/(-income) recognised in other comprehensive income 1 027 (40) Reconciliation of statutory tax rate to effective tax rate: Proﬁt/(loss) before tax 123 732 387 899 Income tax at statutory tax rate (22%) 27 221 85 338 Tax effect of following items: Non-deductible costs 764 210 Tax exemption method dividends (16 610) (75 767) Adjustments prior years tax payable - (3 835) Tax expense/(-income) 11 375 5 945 Speciﬁcation of basis for deferred tax: Pension liabilities (3 383) (5 762) Other current liabilities - (390) Other non-current ﬁnancial assets 9 496 17 406 Interest carried forward (1 652) - Basis for calculation of deferred tax/(tax assets) 4 461 11 254 Total deferred tax liability/(tax assets) (22 %) 981 2 476 Changes in deferred tax balances NOK in thousands 1 January 2022 Changes recog- nised in statement of proﬁt or loss Changes recog- nised in other com- prehensive income 31 December 2022 Pension liabilities (1 268) (504) 1 027 (744) Other current liabilities (86) 86 - - Other non-current ﬁnancial assets 3 829 (1 740) - 2 089 Interest carried forward - (364) - (364) Total deferred tax liability/(tax assets) (22 %) 2 476 (2 521) 1 027 981 Part 4 – 4.5 Notes Elmera Group ASA Annual report 2022 187 Note 6 Investments in subsidiaries NOK in thousands Location Ownership/ voting right Equity year end 2022 (100%) Proﬁt or loss 2022 (100%) Book value Fjordkraft AS Bergen, Norway 100 % 729 682 414 154 1 636 984 Elmera Industrial Ownership AS Bergen, Norway 100 % 350 414 (9 691) 648 322 Book value at 31 December 2022 2 285 307 Dividends The board of directors in Fjordkraft AS has approved a dividend of NOKt 75 500 and a group contribution of NOKt 121 000 which have been recognised as income from investments in subsidiaries in proﬁt or loss for 2022. Note 7 Share capital and shareholder information Shareholders at 31 December 2022 Number of shares Nominal value per share Nominal value Voting rights Ownership Folketrygdfondet 10 182 840 0,30 3 054 852 9,37 % 8,90 % Gudbrandsdal Energi Holding AS 7 682 161 0,30 2 304 648 7,07 % 6,72 % Verdipapirfondet Nordea Norge Verd 4 596 744 0,30 1 379 023 4,23 % 4,02 % Rieber & Søn AS 3 946 969 0,30 1 184 091 3,63 % 3,45 % Vpf Dnb Am Norske Aksjer 3 238 318 0,30 971 495 2,98 % 2,83 % Verdipapirfondet Holberg Norge 3 000 000 0,30 900 000 2,76 % 2,62 % Landkreditt Utbytte 3 000 000 0,30 900 000 2,76 % 2,62 % Verdipapirfondet Dnb Norge 2 547 863 0,30 764 359 2,35 % 2,23 % Perestroika AS 2 501 394 0,30 750 418 2,30 % 2,19 % Hsbc Bank Plc 2 129 093 0,30 638 728 1,96 % 1,86 % Geveran Trading Co Ltd 2 044 000 0,30 613 200 1,88 % 1,79 % The Bank Of New York Mellon Sa/Nv 1 942 516 0,30 582 755 1,79 % 1,70 % Verdipapirfondet Dnb Smb 1 867 442 0,30 560 233 1,72 % 1,63 % Nordnet Bank AB 1 592 812 0,30 477 844 1,47 % 1,39 % Verdipapirfondet Nordea Avkastning 1 509 527 0,30 452 858 1,39 % 1,32 % J.P. Morgan Se 1 385 968 0,30 415 790 1,28 % 1,21 % Clearstream Banking S.A. 1 338 344 0,30 401 503 1,23 % 1,17 % Melesio Invest AS 1 064 840 0,30 319 452 0,98 % 0,93 % Varde Norge AS 1 050 000 0,30 315 000 0,97 % 0,92 % Catilina Invest AS 1 023 720 0,30 307 116 0,94 % 0,90 % Others 50 989 659 0,30 15 296 898 46,94 % 44,59 % Total outstanding shares 108 634 210 32 590 263 100 % 95 % Treasury shares 5 717 590 0,30 1 715 277 0,00 % 5,00 % Total shares in issue 114 351 800 34 305 540 100 % 100 % Part 4 – 4.5 Notes Elmera Group ASA Annual report 2022 188 Note 7 Share capital and shareholder information Share capital and share premium Share capital Share premium Total NOK in thousands 31 December 2022 32 590 1 570 810 1 603 400 31 December 2021 34 291 1 569 610 1 603 900 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 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 2022 2021 Proﬁt/(loss) attributable to equity holders of the company (NOK in thousands) 112 357 381 953 Weighted average number of ordinary shares outstanding 110 833 229 114 291 767 Earnings per share in NOK 1,01 3,34 Share options (see note 12) 1 710 000 1 500 000 Diluted earnings per share in NOK 1,00 3,30 Part 4 – 4.5 Notes Elmera Group ASA Annual report 2022 189 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 2022 Number of shares Number of options Rolf Barmen (Chief Executive Oﬃcer) 59 052 240 000 Henning Nordgulen (Chief Financial Oﬃcer)1 50 000 - Roger Finnanger (Head of Business) 3 378 120 000 Arnstein Flaskerud (Head of Strategy and M&A) 40 760 120 000 Solfrid K. Aase (Head of Service Companies) 11 156 120 000 Solfrid Fluge Andersen (Head of Operations) 5 171 120 000 Per Heiberg-Andersen (Head of Nordic and other end-user companies) 5 000 80 000 Marius Sveipe (Chief Executive Oﬃcer, Gudbrandsdal Energi AS)2 500 10 000 Magnar Øyhovden (Chief Executive Oﬃcer, Fjordkraft AS)3 44 600 20 000 Birte Strander (Chief Financial Oﬃcer)4 35 894 120 000 Jeanne K. Tjomsland (Head of HR, Communications and Sustainability)5 26 028 80 000 Christian Kalvenes (Head of Consumer)6 931 60 000 Alf-Kåre Hjartnes (Chief Operating Oﬃcer)5 8 833 50 000 Steinar Sønsteby (Chairman of the Board) 16 129 - Live Bertha Haukvik (Boardmember) 5 000 - Heidi Theresa Ose (Boardmember) 1 500 - Tone Wille (Boardmember) - - Per Oluf Solbraa (Boardmember) - - Marianne Unhjem (Boardmember, Employee representative) - - Elisabeth M. Norberg (Boardmember, Employee representative) 3 325 - Frank Økland (Boardmember, Employee representative) 645 - Total 317 902 1 140 000 Terms and details for the management option program are outlined in note 12. 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 2022 190 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 the year 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 2022 Elmera Group ASA has a deﬁned contribution pension scheme covering a total of 86 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 106 in 2021), 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 2022 the deﬁned beneﬁt pen- sion scheme covers 2 active members, 1 pensioner and 51 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 ben- eﬁt plan was established to provide supple- mentary retirement pension to employees with a long employment time and a high 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 introduction of life expectancy adjustment has had for public occupational pension schemes. The scheme applies to a closed group of employees. The supplementary allowance was set with ﬁnal eﬀect at the end of 2019, and the supple- ment constitutes a ﬁxed percentage of the individual’s pension basis up to the age of 66 years. This scheme will only provide beneﬁts 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 2022. Part 4 – 4.5 Notes Elmera Group ASA Annual report 2022 191 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 investing more in assets that better match the liabilities. 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 2022 31 December 2022 31 December 2021 NOK in thousands Present value of funded obligations 68 221 1 749 Fair value of plan assets 62 654 1 431 Deﬁcit for funded plans 5 567 318 Present value of unfunded obligations 8 137 4 155 Total deﬁcit of deﬁned beneﬁt pension plans 13 705 4 473 Other employee beneﬁt obligations 3 096 1 289 Employee beneﬁt obligations recognised in Statement of ﬁnancial position 16 801 5 762 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 2021 1 749 1 431 318 4 155 4 473 Additions from transfer of business 67 856 55 158 12 698 4 074 16 772 Accrued pension entitlement for the year - 583 583 Payroll tax (PT) (444) (444) - 82 82 Interest expense (income) 30 30 71 101 Return on plan assets 24 (24) - (24) Actuarial gains and losses (236) 3 604 (3 840) (828) (4 668) Beneﬁts paid (734) (734) - - - Contribution - 3 614 (3 614) - (3 614) At 31 December 2022 68 221 62 653 5 568 8 137 13 705 Part 4 – 4.5 Notes Elmera Group ASA Annual report 2022 192 Note 8 Pension liabilities Amounts recognised in statement of ﬁnancial position 2022 Funded obligations Non-funded obligations Total NOK in thousands Accrued pension entitlement for the year - 583 583 Payroll tax (PT) - 82 82 Net interest expense / (income) 30 71 101 Expected return on plan assets (24) - (24) Pension expenses deﬁned beneﬁt pension schemes 6 736 742 Pension expenses deﬁned contribution pension scheme 2 900 Total amount recognised in proﬁt or loss 3 642 Actuarial gains and losses recognised directly in Other comprehensive income (OCI) NOK in thousands 2022 2021 Net actuarial gains/(losses) recognised in OCI during the year 4 668 (181) Tax eﬀects of actuarial gains/(losses) recognised in OCI 1 027 (40) Signiﬁcant actuarial assumptions Discount rate 3,60 % 1,70 % Salary growth rate 3,75 % 2,50 % Expected growth in base social security amount (G) 3,50 % 2,25 % Estimated return on plan assets 3,60 % 1,70 % Pension growth rate 2,75 % 1,50 % 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 yr - 60 yr - 2,0 % Afte 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 2022 193 Note 9 Other current liabilities Other Current Liabilities consist of the following: NOK in thousands 2022 2021 Accrued expenses 591 90 Installments on long term loan due within 12 months 46 000 46 000 Payroll liabilities 7 410 813 Total other current liabilities 54 001 46 903 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 2022 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 8 369 15 602 8 253 32 224 51% Interest bearing instruments 823 29 607 30 430 49% Total investments 9 192 45 209 8 253 62 654 100 % 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 (75) 94 (14 513) 19 486 Salary growth rate 34 (32) 982 (913) Expected growth in base social security amount (G) 56 (48) 18 306 (13 861) Part 4 – 4.5 Notes Elmera Group ASA Annual report 2022 194 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. The Board of Directors previously included a representative from former major shareholder Eviny AS (previous BKK AS). In the general meeting held in the sec- ond quarter of 2021, this board member was not re-elected. Eviny AS and subsidiaries were therefore considered to be related parties in the ﬁrst two quarters of 2021. 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 2022 2021 Fjordkraft AS Subsidiary Dividend 75 500 344 396 Fjordkraft AS Subsidiary Group contribution 121 000 80 000 Fjordkraft AS Subsidiary Management-, IT-, and other services 71 740 - TrøndelagKraft Subsidiary Management-, IT-, and other services 7 777 - Allrate AS Subsidiary Management-, IT-, and other services 3 752 240 Steddi Payments AS Subsidiary Management-, IT-, and other services 840 - Elmera Nordic AS Subsidiary Management-, IT-, and other services 2 039 - Elmera Industrial Ownership AS Subsidiary Management-, IT-, and other services 525 2 975 Other Subsidiaries Interest income cash pool 5 142 4 290 Distributions received from related parties (NOK in thousands) Related party Relation Purpose of transactions 2022 2021 Fjordkraft AS Subsidiary Purchase of other services 3 230 4 333 Metzum AS Associated company Purchase of other services 13 112 - Atea AS Other** Purchase of products and other services 687 - Part 4 – 4.5 Notes Elmera Group ASA Annual report 2022 195 Note 10 Related party transactions Current receivables from related parties (NOK in thousands) Related party Relation 2022 2021 Fjordkraft AS* Subsidiary 1 003 869 475 557 TrøndelagKraft AS Subsidiary 8 067 365 Allrate AS Subsidiary 3 752 - Elmera Industrial Ownership AS* Subsidiary 228 432 207 843 Steddi Payments AS Subsidiary 840 - Elmera Nordic AS Subsidiary 2 039 - Switch Nordic Green AB Subsidiary 965 726 Gudbrandsdal Energi AS* Subsidiary 17 282 342 * Includes receivables in group account system, refer note 13. Current liabilities to related parties (NOK in thousands) Related party Relation 2022 2021 Fjordkraft AS Subsidiary 143 185 290 093 TrøndelagKraft AS* Subsidiary 281 888 211 022 Allrate AS* Subsidiary 16 888 12 956 Steddi Payments AS* Subsidiary 234 520 210 Energismart Norge AS* Subsidiary 4 4 Elmera Nordic AS* Subsidiary 115 3 360 Gudbrandsdal Energi AS* Subsidiary - 47 802 Metzum AS Associated company 959 - Atea AS Other** 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. Part 4 – 4.5 Notes Elmera Group ASA Annual report 2022 196 Note 11 Remuneration to the Executive management and Board of Directors Part 4 – 4.5 Notes Elmera Group ASA Executive management 2022: NOK in thousands Salary Bonus Other beneﬁts Pension costs Total remuneration 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 1 101 995 3 194 22 711 584 *In 2022 the CEO received a discretionary bonus of NOKt 500 based on the Group’s performance in 2021. In 2022 the Board of Directors have awarded the CEO a discretionary bonus of NOKt 375 based on the Group’s performance, paid in 2023. Executive management 2021: NOK in thousands Salary Bonus Other beneﬁts Pension costs Total remuneration Loans outstanding 31 December Rolf Barmen (Chief Executive Oﬃcer) 3 231 1266* 150 724 5 371 354 Birte Strander (Chief Financial Oﬃcer) 1 743 261 120 392 2 516 - Jeanne K. Tjomsland (Head of HR & Communications) 1 721 261 120 374 2 475 - Arnstein Flaskerud (Head of Strategy and M&A) 1 878 261 120 326 2 585 - Solfrid K. Aase (Head of Service Companies) 1 565 261 100 285 2 210 - Christian Kalvenes (Head of Consumer) 1 565 209 100 170 2 043 - Ole Johan Langenes (Acting Chief Financial Oﬃcer) 7 644 209 42 71 965 - Alf-Kåre Hjartnes (Chief Operating Oﬃcer) 1 721 209 120 314 2 363 365 Roger Finnanger (Head of Business) 1 565 261 100 173 2 098 - Solfrid Fluge Andersen (Head of Operations) 1 565 209 100 173 2 046 - Per Heiberg-Andersen (Head of Nordics and other end-user companies) 1 565 170 100 169 2 003 - Total remuneration executive management 2021 18 759 3573 1172 3171 26 674 719 *In 2021 the CEO received a discretionary bonus of NOKt 1 266 based on the Group’s performances in 2020. In 2021 the Board of Directors have awarded the CEO a discretionary bonus of NOKt 500 based on the Group’s performance, paid in 2022. 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 7) Acting CFO from 1 January 2021 until 31 May 2021 due to maternity leave Remuneration included in the tables is valid for the period from/to the dates stated above. Annual report 2022 197 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 2022 and 31 December 2021: The Board of Directors: NOK in thousands 2022 2021 Steinar Sønsteby (Chairman)1 545 461 Per Axel Koch (Chairman)2 - 161 Live Bertha Haukvik (Boardmember) 401 383 Heidi Theresa Ose (Boardmember) 360 396 Tone Wille (Boardmember)1 312 212 Per Oluf Solbraa (Boardmember)1 312 212 Marianne Unhjem (Boardmember, Employee representative)1 108 73 Lindi Bucher Vinsand (Boardmember, Employee representative)2 - 32 Elisabeth M. Norberg (Boardmember, Employee representative) 108 104 Frank Økland (Boardmember, Employee representative) 108 104 Lisbet Nærø (Chairman of the Nomination committee) 53 52 Atle Kvamme (Member, Nomination committee) 32 31 Jannicke Hilland (Member, Nomination committe)3 - 9 Ragnhild Stolt-Nielsen (Member, Nomination committee) 32 22 Total remuneration Board of directors 2 371 2 252 1) From 21 April 2021. 2) Until 21 April 2021. 3) The remuneration is paid as a fee to BKK AS, and was for the period until 21 April 2021. 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 2,3 %. 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 2022 198 Note 11 Remuneration to the Executive management and Board of Directors 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 Directorspension 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 Part 4 – 4.5 Notes Elmera Group ASA Annual report 2022 199 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 Company`s outstanding shares, (iii) the exercise price for share options shall be set at market price at the time of allot- ment, (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 dismissal), the CEO is bound by the provi- sions 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. Note 11 Remuneration to the Executive management and Board of Directors Part 4 – 4.5 Notes Elmera Group ASA Annual report 2022 200 Note 12 Option program Type Options Options Grant Date 9 February 2022 8 August 2022 Vesting conditions TThe options vest in one tranche with vesting 14 February 2025. The Employee must remain an employee of the Com- pany or an aﬃliated company at the end of the vesting period. The options vest in one tranche with vesting 14 Febru- ary 2026. The Employee must remain an employee of the Com- pany or an aﬃliated company at the end of the vesting period. Expiry date 14 February 2028 14 February 2029 Exercise price (NOK) 37,00 21,50 Total number outstanding 370 000 20 000 Type Options Options Grant Date 9 February 2022 8 August 2022 Measurement date 9 February 2022 8 August 2022 Share price (NOK) 37,28 21,50 Lifetime (years) 3,02 3,52 Volatility 30,00 % 37,47 % Risk-free interest rate 1,92 % 2,73% Fair Value (NOK) 9,4212 5,8469 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 390 000 share options were issued to employees during 2022. 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 outstanding 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 2022 is estimated at average of 30% 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 2022 is NOKt 14 946, not including social security. Part 4 – 4.5 Notes Elmera Group ASA Annual report 2022 201 Note 12 Option Program 1 January 2022 - 31 December 2022 1 January 2021 - 31 December 2021 Shares Weighted Average Exercise Price (NOK) Shares Weighted Average Exercise Price (NOK) Outstanding at the beginning of period 1 500 000 44,57 1 190 000 39,43 Granted 390 000 36,09 330 000 78,00 Exercised -50 000 24,30 (20 000) 24,30 Cancelled - - - - Forfeited -130 000 52,58 - - Expired - - - - Adjusted quantity - - - - Modiﬁcation / Dividends - - - - Outstanding at the end of period 1 710 000 38,92 1 500 000 44,57 Vested outstanding 790 000 22,41 510 000 24,61 Vested and expected to vest 1 710 000 38,92 1 500 000 44,57 Intrinsic value of in-the-money outstanding at the end of the period - - 820 000 18 918 200 Intrinsic value vested outstanding at the end of the period - - 510 000 11 755 600 Outstanding instruments Vested outstanding Exercise price Outstanding per 31.12.2022 Weighted average re- maining Contractual Life Vested outstanding per 31.12.2022 Weighted Average Exercise Price (NOK) 0,00 - 25,00 20 000 6,13 - - 25,00 - 30,00 - - - - 30,00 - 35,00 740 000 1,83 740 000 33 35,00 - 40,00 350 000 4,87 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 4,13 - - 70,00 - 330 000 4,76 20 000 79,7 Total 1 710 000 3,43 790 000 34,48 At 31 December 2022, 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 2021 and 2022: Part 4 – 4.5 Notes Elmera Group ASA Annual report 2022 202 Note 13 Financial assets and financial liabilities The company holds the following ﬁnancial instruments: Financial assets NOK in thousands Notes 2022 2021 Financial assets at amortised cost Trade receivables (1) 1 289 - Receivables from group companies (1) 10,13(b) 1 068 747 260 437 Cash and cash equivalents (1) 13(b) - 222 348 Total ﬁnancial assets 1 070 035 482 785 Financial liabilities NOK in thousands Notes 2022 2021 Liabilities at amortised cost Trade and other payables (1) 31 417 499 Liabilities to group companies (1) 10,13(b) 676 600 565 447 Overdraft facilities (1) 13(a) 534 112 - Interest-bearing short term debt (1) 13(a) 125 000 - Interest-bearing long term debt (2) 13(a) 353 194 396 334 Total ﬁnancial liabilities 1 720 322 962 280 (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. Interest-bearing long term debt includes installments due within the next 12 months which is included in other current liabilities. NOK in thousands 2022 2021 Interest from assets held at amortised cost 8 008 4 290 Interest expense from liabilites at amortised cost (34 989) (21 344) Total ﬁnancial income and expense (26 981) (17 054) 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 2022 203 Credit facilities agreement Elmera Group’s facilities agreement with DNB includes the following credit facilities which are available for Elmera Group ASA and its Norwegian Subsidiaries; • a NOKt 1 000 000 term loan - the acqui- sition 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 facil- ity, the revolving credit facility, and the guar- antee facility is in September 2024. Elmera has the option to extend the termination date by another period of twelve months. In Q4 2022 the interest rate margin on the term loan facility and the revolving credit facility was decreased from 1,75% to 1,30%. 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 ter- mination date. The reference interest rate is NIBOR. In Q4 2022 the interest rate margin on the term loan facility was decreased from 1,75% to 1,30%. Elmera Group ASA drew NOKt 460 000 upon this facility in September 2020, in order to repay a former term loan, and to partly ﬁnance the aquisition of Innlandskraft AS. The term loan principals are being repaid in quarterly instalments of total NOKt 11 500. At 31 December 2022 the remaining term loan principal balance is NOKt 356 500. The loan instalments of NOKt 46 000 that are due the next twelve months have been reclas- siﬁed from interest-bearing long term debt to interest-bearing short term debt, which is included in other current liabilities in the state- ment of ﬁnancial position. Elmera Industrial Ownership AS, a subsidiary of Elmera Group ASA drew an additional NOKt 477 000 upon the facility in 2020. The revolving credit facility - NOKt 500 000 - The RCF The revolving credit facility is available up until one month before the termination date in september 2024. Any drawings for the pur- pose 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 150 000 on this facility in Q1 2022, and Elmera Industrial Ownership AS, a subsidiary of Elmera Group ASA drew another NOKt 125 000 in Q2 2022. The revolving credit facility is classiﬁed as interest-bearing short term debt in the state- ment 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, hereunder gurantees related to re-invoicing agreements with grid owners, property rental agreements and so on. At 31 December 2022 guarantees of total NOKt 2 040 442 are issued under the guar- antee facility. The overdraft facility - NOKt 1 300 000 The overdraft facility has been renewed and is available one year from September 2022. The overdraft facility was increased from NOKt 1 000 000 to NOKt 1 300 000 in Q3 2022. At 31 December 2022 the Group has drawn NOKt 534 112 on the overdraft facility. Security The groups trade receivables has been pledged as security for all credit facilities under the new facilities agreement. Part 4 – 4.5 Notes Elmera Group ASA Transaction costs Transactions costs of NOKt 9 842 related to establishing and extending the Term loan facil- ity are recognised as part of amortised cost of the Term loan. Transaction costs of NOKt 18 605 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. Financial covenant Under the credit facility, there is a leverage covenant that applies at all times, and which shall be calculated quarterly based on con- solidated 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 ﬁnan- cial year. The Group is in compliance with the covenant at the end of this reporting period. 13(a) Credit facilities NOK in thousands Effective interest rate 2022 2021 Term loan NIBOR 3 months + 1,30 % 356 500 402 500 Revolving credit facility NIBOR 3 months + 1,30 % 125 000 - Total principal amounts 481 500 402 500 Annual report 2022 204 13(b) Cash and cash equivalents Current assets NOK in thousands 2022 2021 Cash at bank and in hand - 222 348 Total - 222 348 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 2022. Part 4 – 4.5 Notes Elmera Group ASA Annual report 2022 205 Note 14 Financial risks The company classiﬁes the following catego- ries of ﬁnancial risks: • Market risk • Credit risk • Liquidity risk 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, and as the group account holder of the Group’s group account system it has a net overdraft at year end 2022. The net interest-bearing deposits and over- drafts of each of the group companies holding sub accounts in the group account system, are included in receivables on group com- panies and liabilities 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 2022, 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 2022 the company’s only ﬁnancial assets are trade receivables and receivables on group companies.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(b), 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 2022. Contractual maturities of ﬁnancial liabilities 31 December 2022 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 31 417 - - - - 31 417 31 417 Liabilities to group companies* - - - - - - 676 600 Overdraft facilities - - - 534 112 - 534 112 534 112 Interest-bearing short term debt - - - 125 000 - 125 000 125 000 Interest-bearing long term debt - 11 500 34 500 310 500 - 356 500 353 194 Total 31 417 11 500 34 500 969 612 - 1 047 028 1 720 322 * 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. Part 4 – 4.5 Notes Elmera Group ASA Annual report 2022 206 Note 15 Events after the reporting period The Board of Directors has in the Board Meeting on 15 February 2023 proposed a dividend to the shareholders of NOK 1,50 per share. The proposed dividend is subject to approval by the general meeting. There are no other signiﬁcant events after the reporting period that has not been reﬂected in the consolidated ﬁnancial statements. Part 4 – 4.5 Notes Elmera Group ASA 4.6 Auditor’s report Part 4 – 4.6 Auditor’s report Annual report 2022 207 Annual report 2022 208 Part 4 – 4.6 Auditor’s report Annual report 2022 209 Part 4 – 4.6 Auditor’s report Annual report 2022 210 Part 4 – 4.6 Auditor’s report

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