Elmera Group ASA

Investor Presentation • Feb 13, 2020

Today's agenda

Start	Finish	Time (min)	Subject	Presenter
08:00	08:15	15	1. Financial update Q4 2019	Rolf Barmen/Ole Johan Langenes
08:15	08:25	10	Q&A
08:25	08:50	25	2. CEO state of the union	Rolf Barmen
08:50	09:10	20	3. Regulations and M&A	Arnstein Flaskerud
09:10	09:25	15	Break
09:25	09:35	10	4. Innovation	Arnstein Flaskerud
09:35	09:55	20	5. Consumer segment	Christian Kalvenes
09:55	10:15	20	6. Business segment	Roger Finnanger
10:15	10:25	10	7. New financial targets	Ole Johan Langenes
10:25	Rolf Barmen (CEO) 10:50	25	Q&A

Q4 2019 PRESENTATION

Rolf Barmen (CEO) Ole Johan Langenes (Acting CFO)

Oslo, 13th February

Q4 2019 HIGHLIGHTS

Rolf Barmen (CEO)

Highlights fourth quarter 2019

Favourable market dynamics driving strong profitability growth

• Net revenue growth across all segments. Margin improvement is the main driver for the increase
• Particularly favourable market dynamics in both the elspot market and other commodity markets positively affecting COGS
• EBIT adjusted increase 38% YoY. The Consumer segment is the main driver
• Organic growth in all segments. Reaching the 100k mobile subscribers milestone, further strengthening the position as the largest mobile service provider apart from the network operators
• Fjordkraft Mobile awarded best call centre in both the Telecom industry and on top across all industries in Norway's most prestigious call centre awards

Key Highlights

1 # of deliveries (end of period)	Δ in # of deliveries (QoQ)
622 092	2 637
Increase of 3 % YoY	Of which org. growth 2 637
2 Volume sold	Gross revenue
4 002 GWh	NOK 2 047m
Increase of 1 % YoY	Decrease of -6 % YoY
3 Net revenue (adj.) 2 K6	3 EBIT (adj.)
NOK 372m	NOK 148m
Increase of 22 % YoY 9	Increase of 38 % YoY K7
Basic EPS (reported)	K13NIBD (cash)
NOK 1.20	(NOK 581m)
Increase of 76 % YoY	K19NIBD/LTM EBITDA: -0.85

Sources: Company information

• 1) Number of deliveries excl. Extended Alliance deliveries. Number of deliveries incl. Extended Alliance deliveries: 654,188
• 2) Not including Alliance volume. Volume turnover for alliance partners Q4 2019: 1,297 GWh

³⁾ Adj. Net revenue and EBIT are reported figures adjusted for any estimate deviations on sales and distribution of electricity related to previous reporting periods, special items, unrealised gains and losses on financial derivatives and depreciations from acquisitions

BUSINESS REVIEW

Rolf Barmen (CEO)

Market development

Key highlights in Q4 2019

• Increase in elspot prices during the first part of the quarter, then decrease in prices through November and December
• Temperatures colder than normal in two out of three months. Two out of three months are also colder than last year1
• October: -1.4°C below normal (1.9°C colder than 2018)
• November: -1.0°C below normal (4.7°C colder than 2018)
• December: +3.4°C above normal (1.2°C warmer than 2018)

Weekly elspot prices (NOK/kWh)2

Sources:

1) Temperature figures from met.no's monthly reports

2) Weekly system prices in NOK from Nordpool, forward prices from Montel

Segment development - Consumer

Key highlights in Q4 2019

• Continued organic growth
• Net additions in Q4 2019 were 2,169, all of which organically
• Volume growth of 4% YoY, with increase in # of deliveries being the driver for the growth
• Avg. volume per delivery is stable YoY 3,976 kWh in Q4 2019 vs. 3,959 kWh in Q4 2018

# of electricity deliveries1 ('000)

1) Number of electricity deliveries at the end of the period

Segment development - Business

• Positive development in the segment
• Net additions in Q4 2019 were 468, all of which organically
• Volume decrease 2% YoY driven by decrease in avg. consumption per delivery because of loss of tender customers. Limited financial impact
• Avg. volume per delivery decreasing -5% YoY 23,636 kWh in Q4 2019 vs. 26,771 kWh in Q4 2018

Key highlights in Q4 2019 # of electricity deliveries1 ('000)

1) Number of electricity deliveries at the end of the period

New Growth Initiatives

• Strong growth in the number of Mobile subscribers, reaching the 100k subscriber milestone at the end of the quarter
• Growth of 7,756 subscribers in Q4 2019
• Fjordkraft Mobile awarded best call centre in both the Telecom industry and on top across all industries in Norway's most prestigious call centre awards

• 4% YoY Alliance volume decrease YoY, as Vesterålskraft is now included in the Consumer and Business segments

Key highlights in Q4 2019 # of Mobile subscribers1 ('000)

Sources: Company information

1) Number of mobile subscribers at the end of the period

FINANCIAL REVIEW

Ole Johan Langenes (Acting CFO)

Net revenue improvement across all segments

• Adj. net revenue growth driven almost entirely by margin improvement Consumer segment with the biggest impact
• Particularly favourable market dynamics in both the elspot market and other commodity markets positively affecting COGS
• Last twelve months adj. net revenue improvement ~ 90/10 split between improved margins and volume growth1 YoY

Sources: Company information

1) New Growth Initiatives figures are excluded from the calculations, as high volumes with very low margins distorts the analysis

Continued increase in EBIT adj.

• EBIT improvement of 41 NOKm with the Consumer segment as the main driver

• OPEX increase driven by sales and marketing costs, customer service costs and administrative costs
• Adj. EBIT margin increasing 5 pp YoY. Adj. EBIT margin LTM is increasing 2 pp YoY and 1 pp quarter over quarter

Sources: Company information

Segment overview

• Increase in adj. net revenue YoY margin improvement accounting for ~85% of the increase. Favourable market dynamics driving the growth

• 5 pp margin expansion driven by net revenue growth

• Increase in adj. net revenue is driven by improved margins, primarily from value added services

• Stable development in EBIT margin YoY

• Adj. net revenue and adj. EBIT improvement driven by Alliance

• Solid growth in # of Mobile subscribers, passing 100k subscribers at the end of 2019

Sources: Company information

Negative NWC driven by positive effect from el. cert and operational improvements

Net working capital1 (NOKm)

• Net working capital (NWC) is increasing by 31 NOKm from last quarter, driven by seasonally higher volumes and elspot prices
• Volume increase 73% from last quarter2
• Elspot prices increase 14%3 from Q3 2019 to Q4 2019
• Positive effect from post-payment practice of el certificates throughout the year
• Continuous improvements in the invoicing process is also contributing positively to the development

Sources: Company information

• 1) NWC includes the following items from current assets: Inventories, intangible assets, trade receivables, derivative financial instruments and other current assets (that is, all current assets in the balance sheet except cash and cash equivalents); and the following items from current liabilities; trade payables, current income tax liabilities, derivative financial instruments, social security and other taxes and other current liabilities excl. 55.6 NOKm in short-term interest bearing debt
• 2) Volume sold in the Consumer and Business segments
• 3) Average of daily system prices in NOK

Strong underlying cash generation

Change in net cash Q-o-Q (NOKm)

Sources: Company information

1) OpFCF defined as EBITDA adj. less CAPEX excl. M&A and payments to obtain contract assets

2) Non-cash NWC relates to items included in "change in NWC" that are not affecting net cash position. Other includes interest, tax, change in long-term receivables, proceeds from non-current receivables, proceeds from other long-term liabilities, share based payment expense, change in post-employment liabilities, payment of lease liability and adjustments made on EBITDA.

FULL YEAR 2019

Ole Johan Langenes (Acting CFO)

Group performance stronger than expected

Adj. net revenue1 (NOKm) Adj. EBIT1 (NOKm)

• Product margin improvement is the main driver for the 18% adj. net revenue growth
• Well above targeted, also adjusted for positive M&A effects
• 1 pp of the increase is related to New Growth Initiatives
  • ~60/40 contribution from Alliance and Mobile, driven by both margin improvement and customer growth
• All time high adj. EBIT improvement across all segments
• Adj. EBIT margin increasing 2 pp from 2018 better than targeted

Adj. net revenue and adj. EBIT by segment – Full Year

margins with minor positive impact from

• EBIT margin in line with target

M&A

• EBIT performance in line with targets

• than expected, driven by ability to maintain product margins in a competitive market as well as positive M&A effects
• EBIT margin stronger than targeted, driven by net revenue performance

Sources: Company information

1) 2019 figures are not audited

2) All targets are on an organic basis

Performance vs financial targets1

	Targets	Status
Group	 Ambition to act as a consolidator in a fragmented market	 One acquisition in 2019
Cap.ex.	 Targeted to be in the area of NOK 50m annually on an organic basis over the next three years	 In line with targets (50 NOKm)
Leverage	 Moderate leverage with variations intra-year due to seasonality in net working capital  Current balance sheet enabling substantial capacity to finance acquisitions	 Currently net cash position, supporting M&A ambitions
Dividend	 Attractive and increasing dividend  Target pay-out ratio of at least 80% (based on adjusted net income)	 Proposed dividend of 3.0 NOK per share2,3

1) Base line for the financial targets is adjusted 2018 financials

2) Subject to approval at the annual general meeting

3) How the dividend is calculated:

[(Adjusted EBIT + net finance)*(1-average tax rate) – amortisation of acquisition debt]*pay-out ratio

[(491 NOKm+8 NOKm)*(1-22%)-55.6 NOKm]*94.0%=313.5 NOKm, equivalent of a DPS of 3.0 NOK with the current number of shares outstanding

CEO STATE OF THE UNION

Rolf Barmen (CEO)

Oslo, 13th February

Today's presenters and Fjordkraft management team

Today's presenters Broader management

Rolf Barmen
Chief Executive Officer

Ole Johan Langenes Acting Chief Financial Officer

Arnstein Flaskerud EVP - Head of Strategy and M&A

Christian Kalvenes EVP - Head of Consumer

Roger Finnanger EVP - Head of Business

Alf Kåre Hjartnes EVP - Head of Technology and Digitalisation

Solfrid Aase EVP - Head of Alliance

Solfrid Andersen EVP - Head of Operations

Fjordkraft at a glance – a leading Norwegian electricity retailer for both consumer and business customers

1.4 million people are supplied with electricity from Fjordkraft!

Source: Company information

1) Number of deliveries in the Consumer and Business segment. In addition: ~30k deliveries in Extended Alliance Number of deliveries and subscribers at the end of 2019

A highly successful strategy execution has resulted in an impressive profitability shift and net revenue growth

Source: Company information

1) NGAAP until 2015, IFRS for 2016 and 2017. 2016, 2017, 2018 and 2019 excluding estimate deviations, other gains & losses, special items and depreciation of acquisitions

A highly fragmented industry – Fjordkraft ready to be the consolidator

We observe that We believe that

XXk = Number of electricity deliveries

Fjordkraft is positioned to take lead in the consolidation

Scale including 'Fjordkraft Factory' supporting ability to

Alliance offering building relations to regional / local utilities

Profile adding to attractiveness as partner to utilities

Management and organisation with ambition to consolidate

Listed shares as an attractive acquisition currency

Sources: Company information

A complex power market handled through clear mandates and strict governance – volatility supporting margin upside

Several wholesale markets

• the day-ahead market
• the intraday market
• the balancing market

Five bidding areas in Norway due to grid congestions

• National players get a natural diversification to local price risk

COGS mainly affected by these elements

• The price of electricity within the different price areas
• The price of guarantees of origins
• The price of electricity certificates
• Various trading fees
• Accuracy of consumption estimates
• Purchasing strategy

Fjordkraft has a low risk tolerance with clear mandates and strict governance Exposure to volatility in various markets supports margin upside

Electricity prices expected to increase slightly along with increased volatility

Source:

• 1) 2007-2019 is the average of the Norwegian bidding areas in NOK/kWh from Nordpool Spot. 2022-2040 from The Norwegian Water and Energy Directorate's report 41/2019
• 2) NGAAP until 2015, IFRS for 2016 and 2017. 2016, 2017, 2018 and 2019 excluding estimate deviations, other gains & losses, special items and depreciation of acquisitions

Operating in the highly attractive Norwegian market with an unparalleled demand profile, both now and for the foreseeable future

Electricity consumption in continental Norway1

Source:

• 1) 2018 figures from SSB. 2020-2040 figures from The Norwegian Water and Energy Directorate's baseline scenario in report 22/2019
• 2) The Norwegian Water and Energy Directorate's report 41/2019

Securing profitability through the three «defensive lines»

Growth targets for 2020 are still valid

Number of mobile subscribers ('000)1

Rationale for launch of mobile services:

• Add loyalty to existing customers and support core product by offering market-leading prices and reaching every member of the household
• Capitalise on a large customer base and existing organisation and know-how

Source: Company information

1) Number of mobile subscribers at the end of the period. Targeting 125 thousand subscribers at the end of 2020.

| Capital Markets Day | 2020

Targeting further growth over the next years

Roadmap for growth 2020-2022

Fjordkraft – Summary investment highlights

1	Operating in the attractive Norwegian electricity retailing market with an unparalleled demand profile and a level playing field favouring strong national brands such as Fjordkraft
2	A proven business model providing 'need to have' electricity combined with sought after value-added services - supporting differentiation and margin robustness
3	The leading and most recognized electricity retail brand in Norway
4	Unmatched platform for distribution of best in class service offering to consumer and business customers across Norway
5	Strong competitive advantages and a robust platform for further organic and bolt-on acquisition driven growth
6	Attractive financial profile based on a robust business model with limited capital expenditure requirements resulting in solid bolt-on acquisition and dividend capacity

A clear ESG focus leading to recognition from i.a. United Nations Climate Change secretariat

REGULATORY DRIVERS AND CONSOLIDATION

Arnstein Flaskerud (EVP Head of Strategy, M&A, Innovation and Regulations)

Oslo, 13th February

Substantial changes in the regulatory environment in 2019

The EU Third Energy Package with change of authority and a new independent appeal body

Digitalisation of the industry. Smart meters and Elhub streamlining processes between all the players

Unbundling of vertically integrated companies, and separation of the end user business and monopoly activities

REGULATIONS

Electricity market - regulatory developments providing significant opportunities for large independent retailers

Regulatory milestones in Norway

2020 - 2021 2022 - 2023

• Vertically integrated companies need to split grid operations and retail operations within the following areas:
• Brand name
• ICT infrastructure
• Corporate grid and retail must be split into separate companies
• Functional split all companies with more than 10K deliveries must split processes
• Significant loss of competitive advantage for (regional/local) players

• Significant positive effects for independent retail companies with existing strong national brands such as Fjordkraft

• Change from voluntary to mandatory one invoice imposes all electricity suppliers to invoice grid fee

• New Grid fee models based on Power Tariffs Max load and Time of use

• Economies of scale in billing

• All players must be rigged for handling the grid fee
• Power Tariffs adds more complexity to the market and benefits large players

Sources: Company information

Mobile market - new regulations betters the opportunities for the independent service providers

Regulatory milestones in Norway

• Telenor is obliged to provide access and call origination to other mobile operators
• No discrimination regarding price or technology

• Margin squeeze tests bi-annually to evaluate Telenor's pricing scheme

• This has led to several price reductions to our wholesale procurement

• Still unbalanced rules highly favoring the network operators

2017 - 2019 2020 - 2022

• New market regulation is now published from the regulator
• Modelling player in the margin squeeze test is reduced from 5% to 3% market share

• Telenor are mandated to provide both linear price models and bulk price model

• More balanced regulations

• Gives the service provider a better range of tools to innovate and gives the customers better solutions
• Leads to more robust service provider business models
• Expected effect from Q3 2020

Sources: Company information

MERGERS & ACQUISITIONS

Substantial potential for consolidation within electricity retailing in Norway

National players National (50- players 150k) (50 >)	Typically have strong regional positions and national presence – facing increased competition from larger national players	Typically have strong regional positions and national presence – increased competition from larger national players Players Deliveries	facing ≈ 10 ≈ 1000'
Regional Regional players players (10-50k) (10 - 50k)	The smaller regional players typically have strong regional positions, that may be challenged by unbundling and increased regional consolidation	The smaller regional players typically have strong regional presence, that may be challenged by unbundling and increased local consolidation Players Deliveries	≈ 15 ≈ 350'
Local Local players players (<10k) (< 10k)	Smaller local players with very good local customer relationships, but typically with limited scale and mass business to operate a profitable stand alone retail business	Smaller local players with very good local customer relationships, but typically with limited scale and mass to operate a profitable stand alone retail Players Deliveries	≈ 100 ≈ 250'

Sources: Company information

Main drivers for consolidation

Driver	Description
Regulatory changes	Significant loss of competitive advantage for (regional/local) players
Merging of grid companies	Consolidation in other parts of the value chain is supporting a more horizontal structure and can trigger divestment of retail portfolios
Merging of municipalities	Significant owners of our prospects and substantial value comes into play
Intense competition	Incumbents are rigged for local competition – lack of national brand and distribution channels will lower market share and profitability
Technology development	Increasing technological debt due to digitalisation of both internal and external processes + customer expectations and VAS competition
Complexity and scale	Building up a strong defense and adding more sales and customer service resources is costly

M&A approach and synergies

Fjordkraft is well positioned as the consolidator

M&A roadmap 2020 Maintaining target of +150K deliveries from 2018 (140k remaining)

• 1. The Fjordkraft Factory our system and process architecture enables significant scale and synergy effects
• 1. Offers scale through industrial partnership, as an attractive alternative strategy to regional players
• 1. Financial power and listed shares as an attractive acquisition currency offers the prospects the opportunity to stay exposed to the downstream part of the value chain

M&A roadmap 2020-2022 Targeting a total of 265K new deliveries from M&A

Key highlights from regulations and M&A

1	We expect that M&A activities will fulfill a major part of our Roadmap to Growth
2	Regulations both in the electricity market and the mobile market are supporting Fjordkraft's growth strategy
3	The electricity market is highly fragmented and provides a substantial number of attractive M&A prospects
4	Fjordkraft has the ambitions and experience to consolidate, and offers a wide range of attractive M&A alternatives

Innovation strategy

Arnstein Flaskerud (EVP Head of Strategy, M&A, Innovation and Regulations)

Oslo, 13th February

Growth model and growth opportunities

	Existing services
1	Loyalty and new purchases
	related to core business
2	New customers, organic,
	M&A, expanded alliance
3	New products and services
	from other industries
4	New markets,
	Internationalization

More money from each customer

Sources: TNS Kantar Growth model

Building both linear business models and platform business models

• Sells products and services to end users
• Owns one side of the transaction
• The value creation lies in the product

Collects value from products and services

• Facilitates transactions between the participants
• Owns the infrastructure that facilitates the transactions
• Collects value from network effects

Collects value from the platform users

Fjordkraft is applying a "Fast second" innovation strategy

First mover	Fast second
Must be able to handle high uncertainty related to: • Technology development • Customers adoption This role demands willingness to take uncertain bets and a culture based on high flexibility	Must win the battle of dominant market design Must be able to scale fast • Brand • Sales • Distribution • Operations
When it comes to technology-driven innovation, Fjordkraft	will primarily use a Fast Second

Strategy, which requires careful timing and the ability to act and scale fast

Sources: Fast Second – C. C. Markides and P. A. Geroski

The green shift facilitating new business opportunities

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Ongoing and upcoming new services and businesses

Consumer	Business	New Growth Initiatives
Digital customer front end - overview and control	Full-Service Solar (PPA)	Joint venture software company (Metzum AS) offering standard software components from the Fjordkraft Factory to grid companies and suppliers
Marketplace offering goods from quality 3rd party	Full-Service Heat Pumps (PPA)	Fjordkraft Spin Off. Offering rating and billing services to grid companies and to Fjordkraft's Extended Alliance segment
vendors	EV Charging	Web based solution supporting implementation of climate accounting, climate initiatives and climate neutrality

Key highlights from Innovation Strategy

1	Our focus is to stay closest to the customer and develop our core business, in parallel with looking at new growth areas
2	Our competitive advantage will normally be that we have the most cost-efficient muscles for new growth areas
3	When it comes to technology-driven innovation, we will primarily use a Fast Second Strategy
4	Now it's time to generate spin-offs and to develop platform business models in parallel with our linear business model

CONSUMER

Christian Kalvenes (EVP Head of Consumer)

Oslo, 13th February

The No.1 brand for electricity retailing in the Norwegian consumer market

Consumer segment in brief

Source: Company information, TNS Kantar, Norsk Kundebarometer

• 1) Based on market share and customer awareness data from Kantar TNS Energibarometer Q4 2019
• 2) Kantar's KS-Index January 2020
• 3) Digital Leaders 2019 by Bearingpoint
• 4) Charge Awards 2019
• 5) Net revenue 2019 based on IFRS unaudited figures
• 6) Equivalent to the number of deliveries to all electricity meters. One customer may have multiple electricity meters
• 7) Only includes customer and business segments
• 8) Based on number of deliveries end of Q4 2019 and total market size from NVE's Q4 2018 report

A broad and market leading product offering

Spot products	Variable products	Value added services
Product characteristics: • The customer's price follows the spot price	Product characteristics: • Discretionary pricing with a notification period of up to 14 days	Product characteristics: • Differentiating and supplementary products to our core products
• The customer is fully exposed to the spot price volatility	• More steady and predictable prices for the customer	• Includes i.a. insurance products and flexible payment solutions
• Fixed nominal markup with no price or volume risk for Fjordkraft	• Short term price risk within the notification period for Fjordkraft

Sources: Company information

The battle for market shares – more than just price and local affection

• Competition traditionally spearheaded by price or local affection
• Customer experience has emerged as an important part of the value proposition

Digital customer experience as a competitive advantage

• The Fjordkraft app was released in Q4 2019
• The app will give the customer access to the best services that the Fjordkraft-universe has to offer
• More than 100,000 downloads
• Fjordkraft is perfectly positioned for making digital customer experience a competitive advantage

New technology and digitalisation empowering the customer

• During 2020 a wide range of services will be developed and offered through the Fjordkraft-app:
• Quick and easy overview of electricity consumption, mobile data usage and customer benefits
• Control of EV charging, live energy consumption smart home integration, focusing on helping customers towards a friction free daily life
• The services offered will be a mix of chargeable and free of charge services
• In the short term the main focus will be on growing the user base

Launch of digital marketplace – offering complementary products related to Fjordkraft's core business

• The Fjordkraft Marketplace

• The perfect place for customers to buy quality goods from quality 3rd party vendors
• Fjordkraft will stay intangible, gain new revenue streams and increase customer loyalty
• An important part of our digital ecosystem along with the Fjordkraft app

Perfectly positioned for creating competitive advantages in the digital age

Fjordkraft is perfectly positioned:

• Market leading value proposition
• Fjordkraft's distribution power, brand strength, customer base and factory are important assets to succeed in the digital age
• New revenue streams from new value adding services
• Digital competitiveness also protects our core product revenue streams

Positive revision of financial targets for the Consumer segment

Adj. Net revenue growth Adj. EBIT margin

Current target for 2020:

Targeting mid-single digit net revenue growth on an organic basis.

Current target for 2020:

Targeted to gradually go down towards a sustainable level of slightly above 30% on an organic basis, driven by increased competition.

Maintaining current net revenue growth target for 2020- 2022:

Targeting mid-single digit net revenue growth on an organic basis.

Revised target for 2020-2022: Targeting a sustainable level of 32-34% on an organic basis.

Organic growth	Net rev. per del.	Competition	Digitalisation
Organic growth ambitions of 2-3 % annually	• Core product margin expected to be stable • Value Added Services enable Net Revenue expansion per delivery	Competition expected to increase over the coming years	Maintaining focus and investments in a digitalised customer experience will be important going forward

MOBILE

The No.1 service provider for mobile phone connectivity in the consumer market

62 Source: Company information, TNS Kantar, Norsk Kundebarometer 1) Based on market share and customer awareness data from Kantar TNS Energibarometer Q4 2019

Continued focus on both growth and profitability

Customer growth Financial targets

Current target for 2020: Targeting 125k subscribers at the end of 2020

Current target for 2020: Targeting positive EBIT at the end of 2020

Maintaining target for 2020 – continued focus on growth:

• Targeting 125k subscribers at the end of 2020
• Targeting an annual growth in the area of 20-25k subscribers in 2021 and 2022

Maintaining target for 2020 – new target for 2022:

• Targeting positive EBIT at the end of 2020
• Targeting significant contribution to overall NGI guidance in 2021-2022, constituting ~1/3 of total NGI EBIT in 2022

Main drivers for the growth

• Strong portfolio management to optimize growth and revenue
• New attractive price plan portfolio launched on the 15th of January
• Launch of attractive value adding services i.a. ID-security
• Launch of mobile phones and financing services as part of the Fjordkraft Marketplace
• New market regulation expected in Q1 2020. Expecting positive impact on net revenue

A Consumer segment with clear competitive advantages, ready to capitalise on digitalisation

BUSINESS

Roger Finnanger (EVP Head of Business)

Oslo, 13th February

A brief look at the Business segment

Source: Company information, Kantar TNS, Energibarometeret

• 1) Energibarometeret Q4 2019
• 2) Kantar TNS March 2019
• 3) Net revenue 2019 based on IFRS unaudited figures
• 4) Equivalent to the number of deliveries to all electricity meters. One customer may have multiple electricity meters
• 5) Only includes customer and business segments
• 6) Based on number of deliveries end of Q4 2019 and total market size from NVE's Q4 2018 report

| Capital Markets Day | 2020

Competitive advantage with distribution power covering all segments with national presence

Size:From 0 – 10 GWh

Sales capacity:

Balanced distribution with two internal and two external teams within telemarketing

National presence with four teams covering mid-sized customers

Products in sales:

• Standardized products and VAS covering all needs
• VAS
• 2 year contracts
• Personal advisor for mid-sized customers

A broad and market leading product offering

Spot products	Variable products	Spot w/ risk management	Value added services
Product characteristics: • The customer's price follows the spot price	Product characteristics: • Discretionary pricing with a notification period of up to 14 days	Product characteristics: • Spot with risk management such as index hedging, fixed	Product characteristics: • Differentiating and supplementary products to our core products,
• The customer is fully exposed to the spot price volatility	• More steady and predictable prices for the	price, options etc. • Hedging is mainly done	enabling increased insight and control
• Fixed nominal markup with	customer	back-to-back, reducing Fjordkraft's risk exposure	• Includes i.a. a web-based reporting tool with energy
no price or volume risk for Fjordkraft	• Short term price risk within the notification period for Fjordkraft	• Attractive for businesses seeking to manage budgets through predictable electricity	monitoring and management functionality and various green additional products

Composition of Net Revenue

Product mix

costs

Spot w/ risk management Spot Variable

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A professional and attractive partner through value added services

Increased profitability and increased loyalty through value adding services

• Energy and climate reporting through the web service "Min Bedrift" is offering businesses increased insight about their consumption
• Accompanied with professional advisory services and green product offerings, these differentiating factors increase both profitability and loyalty

Module based Energy Management System offering tailored solutions

Energy mapping – a complete inspection of energy usage in the building

Customers receive a report on energy consumption and suggested measures to reduce consumption

Energy Rating – an overall energy efficiency assessment of a building

Expanding the product range with local sustainable energy solutions

Full-Service Solar (PPA)

• No capital costs
• Long term predictable costs
• Fixed long term price
• No management needed
• Get improved certification

Full-Service Heat Pumps (PPA)

• No capital costs
• Long term predictable costs
• Fixed long term price
• No management needed
• Natural refrigerant

EV Charging

• Co-owners and business
• No administration needed
• Easy cost allocation between users
• Invoice service

Revised financial targets for the Business segment

Adj. Net revenue growth Adj. EBIT margin

Current target for 2020:

Targeting around double digit net revenue growth on an organic basis

Maintaining current net revenue growth target for 2020: Targeting double digit net revenue growth in 2020, then a decrease to a sustainable level of mid-single digit growth

Current target for 2020:

Targeted to increase to above 55% on an organic basis, driven by scale effects

Revised target for 2020-2022: Targeting a sustainable level of 52-54% on an organic basis

Organic growth Net revenue per del.

Organic growth ambitions of ~5% annually

• Improved energy efficiency expected to reduce consumption per delivery
• VAS and product management important to offset volume decrease

Competition expected to increase over the coming years

Competition New products & VAS

Investments in new and attractive products and value added services will be important to win the battle for customers

A Business segment well positioned for further growth

1	Strong distribution power provides rapid market penetration on new products and services
2	A high brand awareness and large customer portfolio makes Fjordkraft an attractive partner for new sustainable solutions
3	New value added services strengthens Fjordkraft's position and climate commitment
4	Long term contracts reducing churn and defending revenue

New financial targets

Ole Johan Langenes (Acting CFO)

Oslo, 13th February

Outlook for 2020-20221

Group	 Targeting high-single digit net revenue growth on an organic basis  Targeting an EBIT margin of 36-38%  Ambition to act as a consolidator in a fragmented market
Consumer	 Growth Targeting mid-single digit net revenue growth on an organic basis
	EBIT  Targeting a sustainable level of 32-34% on an organic basis margin
Business	 Targeting double digit net revenue growth in 2020, followed by a sustainable mid-single digit annual growth in 2021 and 2022 Growth
	EBIT  Targeting a sustainable level of 52-54% on an organic basis margin
New growth	 Targeting a stable nominal EBIT from 2019 to 2020. Positive development in both Alliance and Mobile, while new spin offs negatively affect the segment EBIT in 2020 with in the area of -10 NOKm.
initiatives	 NGI targeted to comprise up towards 5% of group EBIT in 2022
Cap.ex.	 Targeted to be in the area of NOK 50m annually on an organic basis
Tax rate	 Prevailing corporate tax rate for Norway – 22% for 2020
Leverage	 Moderate leverage with variations intra-year due to seasonality in net working capital  Current balance sheet enabling substantial capacity to finance acquisitions
Dividend	 Target pay-out ratio of at least 80% of net income, adjusted for certain cash and non-cash items2  Attractive and increasing dividend

1) All targets are based on adjusted figures, further described under alternative performance measures in the quarterly report 2)Adjusted EBIT + net finance – estimated tax – amortisation of acquisition debt