Elmera Group ASA

Earnings Release • Aug 18, 2022

ROLF BARMEN (CEO) MORTEN OPDAL (ACTING CFO) ROGER FINNANGER (EVP HEAD OF BUSINESS)

Quarterly presentation Q2 2022

Elmera Group – brands and corresponding reporting segments

2

Highlights Q2 2022

• Solid financial results despite low consumption volumes in the quarter
• Group net revenue of 403 NOKm (+4% YoY) and EBIT adj. of 123 NOKm (-13% YoY) in the quarter
• Significant positive shift in trend in the customer development in the Consumer segment, with a stable customer development in the quarter
• Continued growth in the Business segment, both in profitability and deliveries
• Stable development in the strategic customer base in the Nordic segment. Revenues negatively affected by peak/off-peak prices
• New organisational model implemented

Market development Q2 2022: High and volatile prices

• Elspot prices remain at a very high level. Significant area price difference between the various regions and high volatility
• Significant peak/off-peak price differences in Finland and Sweden
  • The Nordic segment was negatively affected by this, especially in June
• High prices in combination with a warm June, negatively affecting consumption volumes, particularly in the Consumer segment (-23% YoY)

Weekly elspot prices (NOK/kWh)1

DELIVERIES AND VOLUME PER SEGMENT

Key figures

New Growth Initiatives

• Alliance volume 936 GWh in Q2 2022, a decrease of 14% YoY due to high elspot prices and a mild June
• Number of Extended Alliance deliveries increase by 1,345 from last quarter
• Number of mobile subscribers Q2 2022 was 148 thousand, a decrease of 5 thousand from last quarter

Update on regulatory and political issues

Local regulatory and political issues are affected by geopolitical issues (The war) and hydrology

• The geopolitical situation continues leading to extreme price levels and volatility, affecting costs related to power purchase
  • Russia vs Ukraine highly affecting price level and volatility
  • Extreme peak/off-peak pricing
  • Potential opening of gas pipelines to Europe and interconnection between FI and RUS will mitigate effects immediately
• The hydrological situation in the southern part Norway
  • Scarce resources, low water reservoir levels due to less rainfall than normal
  • Potential rainfall this autumn will mitigate effects

Other political and regulatory issues

Norway

• In line with our proposals, the focus is on expanding the power support scheme to households, and businesses
• The Government has proposed a change in taxation rules for producers in order to promote fixed price contracts for households and small businesses. The proposed scheme is voluntary for retailers but must be adjusted to be of interest to sell, due to an unbalanced risk exposure. Elmera is working with other retailers and producers through Energy Norway on a balanced solution which will be acceptable for both retailers and producers, while still providing a good product to the customers
• Thus, our concern about governmental interventions in the market that will impact our business is reduced

Finland

• The Finnish government has proposed a reduction in sales tax for electricity to ease the economic burden of customers. Prices have spiked after Russian cut of electricity exports, and yet another delay of the nuclear power plant O3

Sweden

• Sweden have a support scheme similar to the Norwegian one. No changes have been proposed recently. The focus in Sweden seems to be to increase renewable production fast. There is also a growing support for extending the lifetime of the existing nuclear power production, and even building new nuclear reactors.

Product management in the Consumer segment

Spot with risk management – an attractive offering in the Consumer segment

	1191 IIIIaltima AI
Prisområde	Velg område
Pris 1
Påslag	+ 3,90 øre/kWr
Månedsbeløp	+ 39,00 kr
Bindingstid	3 mnd. oppsigelse

11994114441 1V1 6m V han hu
	Måned Endring i spotpris
Januar	-48,59 øre/kWh
Februar	-45,88 øre/kWh
Mars	-25,33 øre/kWh
April	-20,27 øre/kWh
Mai	-74,23 øre/kWh
Juni	-82,62 øre/kWh
Juli	-35,23 øre/kWh

Financial review Q2 2022

MORTEN OPDAL (ACTING CFO)

Group net revenue adj. and EBIT adj.

• Group net revenue adj. increase 4% YoY. Strong margins despite volume decrease and a challenging market
• EBIT adj. decrease 13%. Increased sales and marketing costs are the main drivers, as well as increased provisions for losses
• LTM EBIT adj. margin of 30% (37% in Q2 2021)

Net revenue and EBIT adj. by segment

39

138 161

^{88 100}

EBIT (adj.) LTM EBIT adj. margin

111

62

0%

20%

40%

60%

Consumer:

• Significant positive effects from hedging and otherwise strong margins resulting in stable net revenue YoY, despite 23% YoY decrease in volume (15% decrease in avg. volume per delivery)

Business:

• Net revenue growth from improved product margins. Volume fairly stable despite 7% decrease in avg. volume per delivery

Net revenue and EBIT adj. by segment

Nordic:

• No under-hedging in the quarter
• The peak/off-peak price differences continue to affect the segment negatively, particularly in June

New Growth Initiatives:

• Net revenue growth and EBIT improvement YoY primarily from Mobile

NWC and net cash position – "Cash EBIT adj." ~ EBIT adj.

• NWC increase YoY as elspot prices are almost three times higher than in Q2 2021
  • In Q1 2022, NWC was lower than normal as part of the February power purchase was paid for in April
• The net working capital increase and dividend and share buyback are driving the change in net cash position
• "Cash EBIT adj." in line with EBIT adj.

Organic financial targets 2022-2023

Group	 Targeting a net revenue in the area of NOK 1,600-1,650m for 2022 and 2023  EBIT adj. in the area of NOK 500-550m for 2022 and 2023. 2022 expected in the lower end of the interval (EBIT adj. margin in the area of 30-34%)
Cap.ex	 Targeted to be in the area of NOK 65-70m annually
Sales	 Targeted to be in the area of NOK 180-200m annually
commissions

EVP Business – Roger Finnanger

18. AUGUST 2022

Cost control: Offering a unique range of services to handle all risk associated with power purchasing Our customers

Risk mitigating services

Businesses seeking to manage their electricity cost can combine several services from our tool-box:

• Fixed price
• Price cap
• Index trading 20 90 %
• Optimization with loss frame
• Currency exchange at the time of purchase
• Area price hedging
• Consumption-profiled hedging

Back-to-back trading, reducing Fjordkraft`s risk exposure

Solutions for all B2B customers

• Standardized products design for SMB and SOHO
• Flexible tailored solutions for large customers and public entities

Minimizing price fluctuation

Volatility fuels demand for Spot with Risk management. It gives the customers predictable and lower power costs in the long run. Around 70% of our volume is delivered with risk mitigating services in Fjordkraft and Trøndelag Kraft.

have saved more than 650 NOKm from risk mitigating products ytd. July.

Risk management products attract new customers in the Norwegian market

Customer base:

Comments

• 6 % deliveries growth YoY
• 72 % share of volume delivered with risk management products
• Targeting 75 % risk management of total volume delivered
• High power prices stimulates to reduced consumption pr delivery

Strengthening our management in Fjordkraft AS

• Kent Olav Kvamme is heading up as Commercial Director in Fjordkraft AS
• Further customer growth, value adding services and cost leadership

Quarterly presentation | Q2 2022 19

New energy solutions: Demand driven by the green shift and high power prices

Value propositions

Solar energy solutions Pre - installation:

• Advisory services
• Free online calculation of the customers roof
• Green loans
• PPA for large customers

After – installation:

• Live monitoring on consumption and production
• Solar account
• Solar combined with risk management products

• Dedicated team with expertise in new energy solutions
• 7 advisors consult customers within solar solutions
• Launched new online calculation and websites
• Improved sales system increases the efficiency and hit rate in sales

2023

Organised for further growth: Key actions going forward

Adjusted EBIT reconciliation

Q2 2022	Q2 2021	Full year 2021
4 890 378	2 559 342	15 200 165
(4 486 895)	(2 171 283)	(13 499 669)
403 483	388 059	1 700 496
(217 808)	(195 863)	(899 а93)
(62 570)	(51 091)	(214 455)
(280 378)	(246 954)	(1 114 448)
123 105	141 105	586 048
		(1 034)
		3 387
(32 863)	(45 929)	(188 629)
	19 573	11 515
1 651 108	164 677	1 088 469
(1 651 917)	(150 aas)	(996 739)
	(290)	(9 762)

Profit and Loss account

NOK in thousands	Note	Q1 2022	Q2 2022	Q2 2021	YTD 2022		YTD 2021 Full year 2021
Continuing operations
Revenue	2,3	6 718 296	4 106 418	2 474 937	10 824 713	6 529 806	15 170 991
Direct cost of sales	2	(6 206 461)	(3 703 741)	(2 053 626)	(9 910 202)	(5 574 871)	(13 367 251)
Personnel expenses	2	(111 317)	(76 052)	(79 849)	(187 369)	(191 342)	(409 123)
Other operating expenses	2	(149 870)	(141 756)	(115 934)	(291 626)	(247 180)	(488 517)
Depreciation and amortisation	2,7	(96 119)	(95 432)	(97 101)	(191 552)	(196 875)	(403 084)
Impairment of intangible assets	2,7			(290)		(9 823)	(9 762)
Operating profit		154 528	89 436	128 138	243 964	309 715	493 256
Income/loss from investments in associates and joint ventures		239	470	1 188	709	1 922	2 637
Interest income		5 374	5 786	4 123	11 160	6 623	12 801
Interest expense lease liability		(531)	(499)	(Far)	(1 030)	(1 253)	(2 374)
Interest expense	12	(6 060)	(13 443)	(8 775)	(19 502)	(18 994)	(42 583)
Other financial items, net		(10 094)	5 380	(1 095)	(4 714)	(14 017)	(19 219)
Net financial income (cost)		(11 072)	(2 306)	(5 153)	(13 378)	(25 719)	(48 737)
Profit/ (loss) before tax		143 456	87 130	122 985	230 586	283 996	444 519
Income tax (expense)/income	5	(33 409)	(12 488)	(23 772)	(45 897)	(51 140)	(102 150)
Profit/ (loss) for the period		110 047	74 643	99 212	184 689	232 856	342 369
Basic earnings per share (in NOK)*	6	0,96	0,67	0,87	1,63	2,04	3,00
Diluted earnings per share (in NOK)*	6	0,95	0,66	0,86	1,61	2,01	2,96

Balance sheet

NOK in thousands	Note	31 March 2022	30 June 2022	30 June 2021	31 December 2021
Assets:
Non-current assets
Deferred tax assets		33 922	35 262	36 065	35 092
Right-of-use assets property, plant and equipment		81 286	76 185	91 232	82 806
Property, plant and equipment		7 471	9 119	8 431	8 098
Goodwill	7	1 409 734	1 420 963	1 429 576	1 419 451
Intangible assets	7	650 837	626 996	764 586	694 630
Cost to obtain contracts		295 814	306 755	214 065	287 728
Investments in associates and joint ventures		14 043	14 513	13 090	13 805
Derivative financial instruments	9, 10	661 917	1 679 090	145 541	365 611
Net plan assets of defined benefit pension plans	11	46 524	57 086
Other non-current financial assets		53 732	52 418	46 822	54 784
Total non-current assets		3 255 280	4 278 385	2 749 406	2 962 003
Current assets
Intangible assets		5 910	19 331	1 698	7 518
Inventories		2 126	4 025	6 101	2 146
Trade receivables	8,12,14	4 643 699	2 630 896	1 416 226	5 256 259
Derivative financial instruments	9,10	2 062 147	4 807 188	479 038	1 661 225
Other current assets		101 079	104 458	65 172	38 847
Cash and cash equivalents		1 063 717	161 896	261 282	306 627
Total current assets		7 878 677	7 727 794	2 229 517	7 272 622
Total assets		11 133 957	12 006 179	4 978 923	10 234 624
Equity and liabilities:
Equity
Share capital		34 306	32 590	34 289	34 291
Share premium		993 294	993 294	991 998	992 094
Retained earnings		999 427	593 394	748 824	754 097
Total equity		2 027 027	1 619 278	1 775 112	1 780 482

Balance sheet

NOK in thousands	Note	31 March 2022	30 June 2022	30 June 2021	31 December 2021
Non-current liabilities
Net employee defined benefit plan liabilities	11	66 904	67 744	84 713	93 837
Interest-bearing long term debt	12	697 299	674 589	766 694	720 009
Deferred tax liabilitites		155 189	150 029	135 377	118 318
Lease liability - long term		63 399	58 761	73 892	65 259
Derivative financial instruments	9,10	494 732	1 185 501	165 168	238 481
Onerous contract provisions	য	347 291	1 239 540	54 664	321 814
Other provisions for liabilities		16 150	18 578	16 389	16 740
Total non-current liabilites		1 840 964	3 394 742	1 296 907	1 574 458
Current liabilities
Trade and other payables	14	4 599 821	1 655 296	866 070	4 516 589
Overdraft facilities	12		593 322	136 801	-
Interest-bearing short term debt	12	150 000	275 000
Current income tax liabilities		47 889	65 067	64 206	108 400
Derivative financial instruments	9,10	1 144 384	2 489 848	208 743	719 946
Social security and other taxes		154 859	78 120	84 667	116 390
Lease liability - short term		21 454	21 020	20 654	21 055
Onerous contract provisions	র্বা	586 753	1 397 077	148 591	744 473
Other current liabilities	13	560 805	417 409	377 172	652 831
Total current liabilities		7 265 966	6 992 158	1 906 904	6 879 684
Total liabilities		9 106 930	10 386 901	3 203 811	8 454 142
Total equity and liabilities		11 133 957	12 006 179	4 978 923	10 234 624

Cash flow

NOK in thousands	Note	Q1 2022	Q2 2022	Q2 2021	YTD 2022		YTD 2021 Full year 2021
Operating activities
Profit/(loss) before tax		143 456	87 130	122 985	230 586	283 996	444 519
Adjustments for:
Depreciation	7	46 734	45 554	57 569	92 288	119 407	236 624
Depreciation right-of-use assets		5 170	5 174	4 997	10 343	9 660	19 687
Amortisation of cost to obtain contracts		44 216	44 705	34 534	88 921	67 808	146 773
Impairment of intangible assets	4,7			290		9 823	9 762
Interest income		(5 374)	(5 786)	(4 123)	(11 160)	(6 623)	(12 801)
Interest expense lease liability		531	499	ലിലെ	1 030	1 253	2 374
Interest expense		6 060	13 443	8 775	19 502	18 994	42 583
Income/loss from investments in associates and joint ventures		(239)	(470)	(1 188)	(709)	(1 922)	(2 637)
Change in long-term receivables		(897)	(883)	3 441	(1 779)	3 738	(3 882)
Share-based payment expense		1 018	661	990	1 679	1 909	3910
Change in post-employment liabilities		2 062	2 117	2 357	4 179	4 333	5 544
Payments to obtain a contract		(EE 888)	(53 409)	(55 866)	(109 297)	(109 072)	(264 152)
Changes in working capital (non-cash effect)
Impairment loss recognised in trade receivables	8	6 282	16718	(40 635)	23 000	(45 215)	(57 666)
Provision for onerous contracts	4	(99 516)	1651 917	150 998	1 552 401	132 343	996 739
Change in fair value of derivative financial instruments	4,9,10	71 667	(1 651 109)	(164 677)	(1 579 442)	(170 066)	(1 088 469)
Changes in working capital
Inventories		21	(1 899)	147	(1879)	(3 703)	251
Trade receivables	8	591 843	2 003 118	909 836	2 594 961	95 803	(3 740 539)
Purchase of el-certificates		(72)	(8 806)	(2 039)	(8 878)	(86 191)	(86 044)
Non-cash effect from cancelling el-certificates			8 334	1 921	8 334	85 838	85 838
Purchase of guarantees of origination			(27 659)	15	(27 659)	(4 305)	(11 206)
Non-cash effect from disposal of guarantees of origination		1 648	14 701	2 277	16 349	6 226	7 028
Other current assets		(62 907)	(1690)	47 632	(64 597)	101 749	127 465
Trade and other payables		97 886	(2 949 728)	(506 545)	(2 851 842)	(155 616)	3 505 284
Other current liabilities	13	(51 356)	(221 620)	(112 489)	(272 976)	(184 729)	167 198
Cash generated from operations		742 344	(1 028 988)	461 795	(286 644)	175 597	534 244
Interest paid		(5 a28)	(11 189)	(7 485)	(17 117)	(18 545)	(43 978)
Interest received		5374	5 786	4 123	11 160	6623	12 801
Income tax paid	5	(99 994)	(9 718)		(109 712)	(122 145)	(123 774)
Net cash from operating activities		641 796	(1 044 109)	458 433	(402 313)	41 530	379 293

Cash flow

NOK in thousands	Note	Q1 2022	Q2 2022	Q2 2021	YTD 2022		YTD 2021 Full year 2021
Investing activities
Purchase of property, plant and equipment		(159)	(2 375)	(312)	(2 535)	(1 603)	(2 742)
Purchase of intangible assets	7	(8 394)	(11 664)	(19 131)	(20 058)	(32 550)	(83 225)
Proceeds from sale of intangible assets	7
Net cash outflow on acquisition of subsidiares	13						(42 674)
Net cash outflow on acquisition of shares in associates
Net (outflow)/proceeds from non-current receivables		1 949	2 197	12 225	4 146	13 317	12 975
Net (outflow)/proceeds from other long-term liabilities		16	1 997	1 442	2013	2 271	3 164
Net cash used in investing activities		(6 589)	(9 845)	(5 777)	(16 434)	(18 565)	(112 502)
Financing activities
Proceeds from overdraft facilities	12		593 322	(335 847)	593 322	107 401	(29 400)
Proceeds from revolving credit facility	12	150 000	125 000		275 000
Repayment of revolving credit facility	12
Proceeds from issuance of shares		1 215		389	1 215	389	486
Dividends paid			(400 231)	(заа аве)	(400 231)	(заа аве	(заа аве)
Purchase of treasury shares			(132 827)		(132 827)
Proceeds from long term debt	12
Instalments of long term debt	12	(23 425)	(23 425)	(23 425)	(46 850)	(46 850)	(93 700)
Repayment of long term debt	12
Payment of lease liability		(5 128)	(5 161)	(4 834)	(10 289)	(9 364)	(19 095)
Net cash used in financing activities		122 662	156 677	(763 703)	279 339	(348 410)	(541 696)
Net change in cash and cash equivalents		757 869	(897 277)	(311 047)	(139 407)	(325 445)	(274 905)
Cash and cash equivalents at start of period		306 627	1 063 717	561 092	306 627	599 348	599 348
Effects of exchange rate changes on cash and cash equivalents		(779)	(4 545)	11 239	(5 324)	(12 620)	(17 816)
Cash and cash equivalents at end of period		1 063 717	161 896	261 284	161 896	261 283	306 627