Elmera Group ASA

Investor Presentation • May 5, 2022

Quarterly presentation Q1 2022

ROLF BARMEN (CEO) BIRTE STRANDER (CFO)

The "Elmera Group"

Highlights Q1 2022

• Group net revenue of 484 NOKm and EBIT adj. of 160 NOKm in the quarter in line with trading update
• Loss of 20k electricity deliveries in the quarter however, the trend at the end of the quarter was fairly stable
• All time high financial performance in the Business segment this quarter
• Warm weather volume sold1 decrease 20% YoY, negatively affecting the Consumer segment and Alliance in particular
• Share buyback program initiated, starting from 5 May 2022
• Dividend of NOK 3.5 per share for 2021 to be distributed to eligible shareholders today, 5 May 2022

Market development Q1 2022: High prices, warm weather

• Elspot prices remain at a very high level. Nordic prices are currently determined by oil & gas prices and the weather – the former highly affected by the ongoing war in Ukraine
• Temperatures have been warmer than normal in all of Q1
  • Lower than normal consumption volumes particularly affecting the Consumer segment and Alliance negatively
  • Low consumption volumes also in the Nordic segment thus no negative effects from under-hedging of the fixed price contracts in Q1
    • However, peak/off-peak price differences continue to affect the segment negatively

DELIVERIES AND VOLUME PER SEGMENT

Key figures

New Growth Initiatives

• Alliance volume 1,404 GWh in Q1 2022, a decrease of 16% YoY due to mild weather
• Stable development in number of Extended Alliance deliveries from last quarter
• Number of mobile subscribers Q1 2022 was 154 thousand, a decrease of 6 thousand from last quarter
• Strong customer demand for solar panel solutions and EV charging

Regulatory update: We are prepared, support proposals and focus on our important role

Regulatory:

Proposal from the Norwegian Government on changes in marketing, rating and billing legislation. Many aspects in the proposal are already handled through the certification Trygg Strømhandel ("Safe electricity retailing"), where the Group already is certified and compliant. The most important change is that the notice period for significant changes of contracts, including pricing, for residential customers increases from 14 to 30 days.

Our take is that this will bring more value to the traditional variable products and the proposal will be supported by us.

The Fortum brand NorgesEnergi recently announced that they terminate reinvoicing of grid rent. The regulator states that the reinvoicing practise might be moving towards an end. We are currently considering whether to continue to offer reinvoicing or not.

Public Affairs:

High deviation between political promises to impose lower prices, and what experts and bureaucrats see possible to conduct.

Left-wing parties have used the opportunity to demand higher degree of governmental involvement. This has created some turmoil in the market. Experts and interest groups speaks well of the implemented power support scheme, and how it enables redistribution of the government's super profit without any disturbance of the free market. Our take is that the power support scheme is the best medium-term solution.

The political proposals are questioned by experts and still perceived as unclear. The energy sector will continue to reach out to politicians and interest groups to seek information and advocate our take in the Norwegian power sector. We have several scheduled meetings with politicians and authorities during the spring and attending Arendals-uka in August.

Regulatory update: We are prepared, support proposals and focus on our important role

Our important role in the value chain:

Efficiency – We operate our part of the value chain, with billions of data transactions every year, the most efficient way in the best functioning market in Europe

Innovation – We innovate to provide customers with energy optimizing solutions

Customer service – We handle +1 million inquiries yearly, with industry leading advices and no frills

Competitive and value creating product management – We offer products and services to all segments – both risk lovers and consumers in need for risk mitigating products, to make sure that customers are offered suitable services to best prices available

Upcoming operational activities Q2

• Market campaign on smart charging, also including fixed price customers
• Further develop the product portfolio in the Consumer segment
• Increase telemarketing efforts in the Business segment across the Norwegian brands (Fjordkraft, TrøndelagKraft, Gudbrandsdal Energi)
• Implementing product management cross border
• Continuing M&A prospecting, particularly in Sweden
• Roll out of smart phone application to Alliance Partners
• Increasing capacity of the EV charging and solar panel sales team due to strong customer demand

Financial review Q1 2022

BIRTE STRANDER (CFO)

Group net revenue adj. and EBIT adj.

• Group net revenue adj. decrease 5% YoY 20% YoY decrease in volume is the main driver for the decrease
• EBIT adj. decrease 25% YoY
• LTM EBIT adj. margin of 32% (37% in Q1 2021)

Net revenue and EBIT adj. by segment

58

39

138 161

^{88 100}

0%

20%

40%

60%

Consumer:

• 29% YoY decrease in volume (22% decrease in avg. volume per delivery) the main driver for the reduction in net revenue, primarily due to mild weather and high elspot prices

Business:

• All time high financial performance
• Very strong margins in the quarter, delivering solid growth in net revenue despite 17% YoY volume decrease

Net revenue and EBIT adj. by segment

-7 -4 -4

Q1 21 Q2 21 Q3 21 Q4 21 Q1 22

-20

0

20

40

4

-3

Nordic:

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

New Growth Initiatives:

• Net revenue growth and EBIT improvement YoY primarily from Mobile

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

• NWC lower than normal, as part of the February power purchase was paid for in April
• Q1 2021 affected by quarter-end on Easter public holiday
• The net working capital decrease is the primary driver behind the improved 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

Adjusted EBIT reconciliation

Revenue
NOK in thousands	Q1 2022	Q1 2021	Full year 2021
Revenue adjusted*	6 890 652	4 062 952	15 200 165
Direct cost of sales adjusted	(6 406 665)	(3 553 371)	(13 499 669)
Net revenue adjusted	483 987	509 581	1 700 496
Personnel and other operating expenses adjusted	(261 188)	(245 013)	(899 993)
Depreciation and amortisation adjusted	(62 406)	(49 280)	(214 455)
Total operating expenses adjusted	(323 594)	(294 293)	(1 114 448)
Operating profit adjusted	160 393	215 288	586 048
Acquisition related costs		(1 034)	(1 034)
Other one- off items		3 387	3 387
Depreciation of acquisitions **	(33 713)	(50 575)	(188 629)
Estimate deviations			11 515
Unrealised gains and losses on derivatives	(71 667)	5 388	1 088 469
Change in provisions for onerous contracts	99 516	18 655	(996 739)
Impairment of intangible assets		(a 533)	(9 762)
Operating profit (EBIT)	154 528	181 577	493 256

Profit and Loss account

NOK in thousands	Note	Q1 2022	Q1 2021	Full year 2021
Continuing operations
Revenue	2,3	6 718 296	4 054 869	15 170 991
Direct cost of sales	2	(6 206 461)	(3 521 245)	(13 367 251)
Personnel expenses	2	(111 317)	(111 493)	(409 123)
Other operating expenses	2	(149 870)	(131 246)	(488 517)
Depreciation and amortisation	2,7	(96 119)	(99 774)	(403 084)
Impairment of intangible assets	2,7		(a 633)	(9 762)
Operating profit		154 528	181 577	493 256
Income/loss from investments in associates and joint ventures Interest income Interest expense lease liability Interest expense Other financial items, net	12	239 5 374 (531) (6 060) (10 094)	734 2 499 (୧୧୫) (10 219) (12 922)	2637 12 801 (2 374) (42 583) (19 219)
Net financial income (cost)		(11 072)	(20 566)	(48 737)
Profit/ (loss) before tax		143 456	161 011	444 519
Income tax (expense)/income	5	(33 409)	(27 368)	(102 150)
Profit/ (loss) for the period		110 047	133 643	342 369
Basic earnings per share (in NOK)*	6	0,96	1,17	3,00
Diluted earnings per share (in NOK)*	6	0.95	1.15	2,96

Balance sheet

NOK in thousands	Note	31 March 2022	31 March 2021	31 December 2021
Assets:
Non-current assets
Deferred tax assets		33 922	35 143	35 09
Right-of-use assets property, plant and equipment		81 286	92 302	82 80
Property, plant and equipment		7 471	8819	800
Goodwill	7	1 409 734	1 424 680	1 419 45
Intangible assets	7	650 837	798 173	694 63
Cost to obtain contracts		295 814	191 660	287 72
Investments in associates and joint ventures		14 043	11 902	13 80
Derivative financial instruments	ு	661 917	160 460	365 61
Net plan assets of defined benefit pension plans	11	46 524
Other non-current financial assets		53 732	62 488	54 78
Total non-current assets		3 255 280	2 785 626	2 962 00
Current assets
Intangible assets		5 910	3 443	7 51
Inventories		2 126	6 248	2 14
Trade receivables	8,12,14	4 643 699	2 279 982	5 256 25
Derivative financial instruments	9,10	2 062 147	183 563	1 661 22
Other current assets		101 079	111 145	38 84
Cash and cash equivalents		1 063 717	561 092	306 62
Total current assets		7 878 677	3 145 472	7 272 62
Total assets		11 133 957	5 931 098	10 234 62
Equity and liabilities:
Equity

Share capital	34 306	34 285	34 291
Share premium	993 294	991 614	992 094
Retained earnings	999 427	1 034 773	754 097
Total equity	2 027 027	2 060 672	1 780 482

Balance sheet

NOK in thousands	Note	31 March 2022	31 March 2021	31 December 2021
Non-current liabilities
Net employee defined benefit plan liabilities	11	66 904	79 688	93 837
Interest-bearing long term debt	12	697 299	789 260	720 009
Deferred tax liabilitites		155 189	140 118	118 318
Lease liability - long term		63 399	78 133	65 259
Derivative financial instruments	9	494 732	203 286	238 481
Onerous contract provisions	4	347 291		321 814
Other provisions for liabilities		16 150	14 501	16 740
Total non-current liabilites		1 840 964	1 304 988	1 574 458
Current liabilities
Trade and other payables	14	4 599 821	1 365 123	4 516 589
Overdraft facilities	12		472 648
Interest-bearing short term debt	12	150 000
Current income tax liabilities		47 889	35 912	108 400
Derivative financial instruments	9,10	1 144 384	55 945	719 946
Social security and other taxes		154 859	170 295	116 390
Lease liability - short term		21 454	17 414	21 055
Onerous contract provisions	র্ব	586 753	50 948	744 473
Other current liabilities	13	560 805	397 155	652 831
Total current liabilities		7 265 966	2 565 439	6 879 684
Total liabilities		9 106 930	3 870 427	8 454 142
Total equity and liabilities		11 133 957	5 931 098	10 234 624

Cash flow

NOK in thousands	Note	Q1 2022	Q1 2021	Full year 2021
Operating activities
Profit/(loss) before tax		143 456	161 011	444 519
Adjustments for:
Depreciation	7	46 734	61 838	236 624
Depreciation right-of-use assets		5 170	4 663	19687
Amortisation of cost to obtain contracts		44 216	33 273	146 773
Impairment of intangible assets	4,7		а езз	9 762
Interest income		(5 374)	(2 499)	(12 801)
Interest expense lease liability		531	658	2374
Interest expense		6 060	10 219	42 583
Income/loss from investments in associates and joint ventures		(239)	(734)	(2 637)
Change in long-term receivables		(897)	297	(3 882)
Share based payment expense		1 018	ala	3910
Change in post-employment liabilities		2 062	1 976	5 544
Payments to obtain a contract		(55 888)	(53 206)	(264 152)
Changes in working capital (non-cash effect)
Impairment loss recognised in trade receivables	8	6 282	(4 581)	(57 666)
Provision for onerous contracts	4	(99 516)	(18 655)	996 739
Change in fair value of derivative financial instruments	4,9,10	71 667	(2 388)	(1 088 469)
Changes in working capital
Inventories		21	(3 850)	251
Trade receivables	8	591 843	(813 933)	(3 740 539)
Purchase of el-certificates		(72)	(84 153)	(86 044)
Non-cash effect from cancelling el-certificates			83 978	85 898
Purchase of guarantees of origination			(4 320)	(11 206)
Non-cash effect from disposal of guarantees of origination		1 648	3 ਰੇਖਰੇ	7 028
Other current assets		(62 907)	54 117	127 465
Trade and other payables		97 886	350 asa	3 505 284
Other current liabilities	13	(51 356)	(72 240)	167 198
Cash generated from operations		742 344	(286 197)	534 244
Interest paid		(2 a58)	(11 060)	(43 978)
Interest received		5 374	2 499	12 801
Income tax paid	5	(99 994)	(122 145)	(123 774)
Net cash from operating activities		641 796	(416 903)	379 293

Cash flow

NOK in thousands	Note	Q1 2022		Q1 2021 Full year 2021
Investing activities
Purchase of property, plant and equipment		(159)	(1 291)	(2 742)
Purchase of intangible assets	1	(8 394)	(13 418)	(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	1 092	12 975
Net (outflow)/proceeds from other long-term liabilities		16	829	3 164
Net cash used in investing activities		(6 589)	(12 788)	(112 502)
Financing activities
Proceeds from overdraft facilities	12		443 248	(29 400)
Proceeds from revolving credit facility	12	150 000
Repayment of revolving credit facility	12
Proceeds from issuance of shares		1 215		486
Dividends paid				(заа аве)
Proceeds from long term debt	12
Instalments of long term debt	12	(23 425)	(23 425)	(93 700)
Repayment of long term debt	12
Payment of lease liability		(5 128)	(4 530)	(19 095)
Net cash used in financing activities		122 662	415 293	(541 696)
Net change in cash and cash equivalents		757 869	(14 398)	(274 905)
Cash and cash equivalents at start of period		306 627	599 348	599 348
Effects of exchange rate changes on cash and cash equivalents		(779)	(23 859)	(17 816)
Cash and cash equivalents at end of period		1 063 717	561 092	306 627