Elmera Group ASA

Investor Presentation • Aug 22, 2019

Q2 2019 PRESENTATION

Rolf Barmen (CEO) Birte Strander (CFO)

Oslo, 22th August

Q2 2019 HIGHLIGHTS

Rolf Barmen (CEO)

Highlights second quarter 2019

Another solid quarter driven by strong price management and favourable market dynamics

• Strong YoY growth in net revenue adj. and EBIT adj. driven by strong price management and favourable market dynamics
• Mild weather and decrease in average consumption per delivery is offset by growth in # of deliveries
• Strong growth in number of mobile subscribers passing 80k and further strengthening our position as the largest mobile service provider without its own mobile network
• Successful acquisition of Vesterålskraft Strøm AS. Transaction completed 1 July 2019

Key Highlights

1 # of deliveries (end of period)	Δ in # of deliveries (QoQ)
607 563	911
Increase of 2 % YoY	Of which org. growth: 911
2 Volume sold	Gross revenue
2 696 GWh	NOK 1 428.8m
Decrease of 0 % YoY	Increase of 10 % YoY
3 Net revenue (adj.) 2	3 EBIT (adj.) K6
NOK 273.8m	NOK 98.4m
Increase of 13 % YoY 9	Increase of 26 % YoY K7
Basic EPS (reported)	K13NIBD (cash)
NOK 0.73	(NOK 292.2m)
Increase of 40 % YoY	K19NIBD/LTM EBITDA: -0.51

Sources: Company information

• 1) Number of deliveries excl. Extended Alliance deliveries. Number of deliveries incl. Extended Alliance deliveries: 641,954
• 2) Not including Alliance volume. Volume turnover for alliance partners Q2 2019: 858 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

Agreement to acquire Vesterålskraft Strøm ("VKS")

• Clear strategic rationale for acquiring VKS
• o Strong strategic fit a regional office enabling increased market share in the northern part of Norway
• o Leveraging from long-lasting Alliance relationship
• VKS – a sales organisation with solid customer growth
• o 8,600 electricity deliveries split into 7,800 in the consumer market and 800 in the business market
• o 18 employees, primarily sales personnel and customer service
• The transaction was completed at an EV of NOK 27.3m, split between the customer portfolio (NOK 24.8m) and workforce (NOK 2.5m)
• o The transaction was financed through available cash
• o Seller has purchased FKRAFT shares with the settlement
• Underlying cost synergies1 estimated to at least NOK 1.5m p.a.
• o However, the acquisition and the new regional office enables market share gains in the northern part of Norway, and we will use this momentum to further invest in sales activities in this region
• One-off integration costs expected to be in the area of NOK 4m
• The transaction was completed 1 July 2019

Transaction highlights Customer portfolio ('000)

Key financials 2018 (NOKm)

Sources: Company information

1) Underlying net revenue and EBIT based on reported 2018 financials and adjusted for certain growth related costs and pension costs

Solar panels now available to the Consumer segment

• Consumer customers can now order solar panels for their homes through Fjordkraft
• Three different panel offerings with different outputs and prices
• The majority of consumers want to finance it on their own. Financing might be offered in the future
• Professional and nation-wide partner in Solcellespesialisten
• Check the suitability of your roof at www.fjordkraft.no/solceller
• Supporting loyalty and strengthening the value added service offering

BUSINESS REVIEW

Rolf Barmen (CEO)

Market development

Key highlights in Q2 2019

• The decrease in elspot prices from Q1 continues beneficial for variable products
• Warmer than normal weather in two out of three months, having a negative impact on average consumption per delivery1
• April: +3.3°C above normal
• May: -0.3°C below normal
• June: +0.5°C above normal
• According to NVE, the market churn figures for Q1 2019 are delayed due to Elhub

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
• 3) Figures from the Norwegian Water Resources and Energy directorate

Segment development - Consumer

Key highlights in Q2 2019

• Positive organic development quarter over quarter and a positive trend within the quarter
• Net additions in Q2 2019 were 1,471, all of which organic
• Stable volume development YoY. The decrease in avg. volume per delivery is offset by increase in # of deliveries
• Avg. volume per delivery decreasing -7% YoY 2,600 kWh in Q2 2019 vs. 2,785 kWh in Q2 2018

# of electricity deliveries1 ('000)

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

Segment development - Business

• A slight decrease in number of deliveries, driven by loss of tender customer. Limited financial impact
• Net additions in Q2 2019 were -560
• Volume decrease 1% YoY. Decrease in avg. volume per delivery is partly offset by growth in # of deliveries
• Avg. volume per delivery decreasing -9% YoY 17,279 kWh in Q2 2019 vs. 19,043 kWh in Q2 2018

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

Key highlights in Q2 2019 # of electricity deliveries1 ('000)

Volume (GWh)

New Growth Initiatives

• Strong development with an accelerating growth in number of mobile subscribers. Highest quarterly growth since Q1 2018
• Growth of 9,446 subscribers in Q2 2019
• -6% YoY Alliance volume growth driven by mild weather
• New contract within Extended Alliance
• ~5,000 electricity deliveries and ~8,000 broadband customers with expected start-up in 2020

Key highlights in Q2 2019 # of Mobile subscribers1 ('000)

Sources: Company information

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

FINANCIAL REVIEW

Birte Strander (CFO)

Net revenue improvement across all segments

Change in adj. net revenue (NOKm) Adj. net revenue LTM (NOKm)

• Successful margin improvement in a quarter with 0% YoY volume growth
• Favourable elspot price development positively impacting variable product margins in both Consumer and Business segments
• Last twelve months adj. net revenue improvement ~ 70/30 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

Strong adj. EBIT performance

Change in adj. EBIT (NOKm)

Adj. EBIT LTM (NOKm)

• Positive EBIT contribution from all segments EBIT margin in the quarter up 4pp YoY
• OPEX increasing by 7% YoY, primarily driven by sales and marketing
• Solid growth in LTM EBIT stable development in LTM EBIT margin

Solid growth in all segments

• Increase in adj. net revenue driven by strong price management in favourable market conditions, contributing to a 1 pp adj. EBIT margin improvement YoY

• Increase in adj. net revenue, driven by both value added services and variable products, contributing to a 6 pp adj. EBIT margin increase YoY

• Adj. net revenue improvement driven ~60/40 between Mobile and Alliance

• ~50/50 split in EBIT contribution from Mobile and Alliance

Sources: Company information

Seasonally lower volume and decreasing elspot prices driving NWC decrease QoQ

103 202 892 318 262 311 594 123 128 138 142 154 146 150 151 152 - 200 400 600 800 1 000 1 200 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Net working capital Capitalised commission expense

Net working capital1 (NOKm)

• Net working capital (NWC) decreased by 471 NOKm from last quarter due to seasonally lower volume and decrease in prices.
• Prices decrease 24%2 and volume decrease 39%3 from Q1 2019 to Q2 2019
• NWC decreasing 195 NOKm YoY. Prices decrease 7% YoY2 while volume is stable3

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) Average of daily system prices in NOK
• 3) Volume sold in the Consumer and Business segments

From net debt to net cash– driven by seasonal decrease in NWC. 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.

Outlook Revised CAPEX target

Group	 Targeting high-single digit net revenue growth on an organic basis  Targeting a stable EBIT margin on an organic basis  Ambition to act as a consolidator in a fragmented market
	Revised after Q1 2019: Expected to be  Growth Targeting mid-single digit net revenue growth on an organic basis somewhat higher than targeted for 2019
Consumer	 EBIT Targeted to gradually go down towards a sustainable level of slightly above 30% on an organic basis, driven by increased margin competition
	 Growth Targeting around double digit net revenue growth on an organic basis
Business	EBIT  Targeted to increase to above 55% on an organic basis, driven by scale effects margin
New growth initiatives	 Clarified in Q1 2019: Expecting ~25% Targeting substantial growth in number of customers in both Extended Alliance and Mobile improvement in nominal EBIT from  EBIT loss in 2019 targeted lower than 2018. Positive run rate EBIT expected from second half of 2020 2018 to 2019
Cap.ex.	Revised in Q2 2019: Targeted in the area of 50  Targeted to be in the area of NOK 40m annually on an organic basis NOKm annually on an organic basis
Leverage	 Moderate leverage with variations intra-year due to seasonality in net working capital  Current balance sheet enabling substantial capacity to finance acquisitions
Dividend	 Attractive and increasing dividend  Target pay-out ratio of at least 80% of net income, adjusted for certain cash and non-cash items1

1) Adjusted EBIT + net finance – estimated tax – amortisation of acquisition debt

Appendix

PROFIT AND LOSS ACCOUNT

Summary reported financials

NOK million	Q2 2019	Q2 2018	∆ YoY
Gross revenue	1 428.8	1 297.3	131.4
Cost of sales	-1 145.6	-1 048.6	-96.9
Net revenue	283.2	248.7	34.5
Personnel expenses	-47.9	-40.7	-7.2
Other operating expenses	-92.5	-95.4	2.9
Operating expenses	-140.4	-136.1	-4.3
Other gains and losses, net	-0.1	2.0	-2.1
EBITDA	142.7	114.6	28.0
Depreciation & amortization	-48.0	-43.6	-4.4
Operating profit (EBIT)	94.7	71.1	23.6
Net financials	3.3	0.1	3.2
Profit / loss before taxes	98.0	71.2	26.8
Taxes	-21.9	-16.7	-5.2
Profit / loss for the period	76.1	54.5	21.7
Basic earnings per share (in NOK)	0.73	0.52	0.21
Diluted earnings per share (in NOK)	0.72	0.52	0.20

ADJUSTED EBIT reconciliation

NOK in thousands	Q2 2019	Q2 2018	YTD 2019	YTD 2018	FY 2018
Revenue adjusted	1 373 782	1 284 466	3 919 416	3 200 471	6 712 291
Corporate 1)	54 969	12 879	54 969	12 879	8 657
Revenue	1 428 751	1 297 345	3 974 385	3 213 350	6 720 948
Direct cost of sales adjusted	(1 099 954) (1 042 430) (3 267 227) (2 644 374) (5 624 399)
Corporate 1)	(45 603)	(6 206)	(45 603)	(6 206)	873
Direct cost of sales	-1 145 557	-1 048 636	-3 312 830	-2 650 580	-5 623 526
Revenue less direct cost of sales adjusted	273 828	242 036	652 189	556 097	1 087 893
Corporate 1)	9 366	6 673	9 366	6 673	9 529
Revenue less direct cost of sales	283 194	248 709	661 555	562 770	1 097 422
Total operating expenses adjusted	(175 392)	(163 996)	(371 815)	(331 343)	(697 751)
Special items 2)	(1 997)	(5 709)	(1 997)	(16 677)	(25 835)
Depreciation of acquisitions 3)	(11 009)	(9 948)	(22 011)	(11 020)	(36 375)
Total operating expenses	-188 398	-179 653	-395 824	-359 040	-759 961
Other gains and losses 4)	(92)	2 011	(84)	(3 048)	(10 578)
Operating profit	94 705	71 068	265 647	200 681	326 883
Interest income	5 553	3 594	10 435	7 535	15 178
Interest expense lease liability	(179)	-	(371)	-	-
Interest expense	(1 650)	(1 606)	(3 228)	(1 660)	(4 927)
Other financial items, net	(416)	(1 866)	(1 503)	(3 180)	(5 277)
Profit/(loss) before tax	98 012	71 189	270 980	203 376	331 858

1) Corporate consists of estimate deviations previous year and special revenue items. A large proportion of the Group's final settlement of sales and distribution of electricity is made after the Group has finalised its financial statements. At the date of reporting, the Group recognises electricity revenue and the associated cost of sales based on a best estimate approach. Thus, any estimate deviation related to the previous reporting period is recognised in the following reporting period. Management is of the opinion that the underlying operating profit in the reporting period should be adjusted for such estimate deviations related to previous reporting periods, thus the table below also presents the Group's operating profit before such estimate deviations in the line "Operating profit (before unallocated and estimate deviations)".

ADJUSTED EBIT reconciliation cont.

2) Special items consists of one-time items as follows:

NOK in thousands	Q2 2019	Q2 2018	YTD 2019	YTD 2018	FY 2018
Special items incurred specific to:
- the process of listing the company on Oslo Stock Exchange	-	(124)	-	(11 022)	(11 323)
- acquisition related costs	(1 997)	(5 125)	(1 997)	(5 195)	(11 643)
- legal costs related to the compensatory damages	-	(460)	-	(460)	(460)
- strategic costs related to markets abroad	-	-	-	-	(2 409)
Special items	-1 997	-5 709	-1 997	-16 677	-25 835

3) Depreciation of acquisitions consists of depreciation related to customer portfolios and acquisitions of companies accounted for in intangible assets in the consolidated statement of financial position. The Group has decided to report the operating profit of the segments adjusted for depreciation of acquisitions. In order to accommodate this, historically reported figures have been adjusted accordingly:

NOK in thousands	Q2 2019	Q2 2018	YTD 2019	YTD 2018	FY 2018
TrønderEnergi Marked acquisition	(7 788)	(8 878)	(15 576)	(8 878)	(30 777)
Oppdal Everk Kraftomsetning acquisition	(1 085)	-	(2 171)		(1 306)
Other customer acquisitions	(2 136)	(1 070)	(4 264)	(2 142)	(4 292)
Depreciation of acquisitions	-11 009	-9 948	-22 011	-11 020	-36 375

4) Other gains and losses, net consist of gains and losses on derivative financial instruments associated with the purchase and sale of electricity.

BALANCE SHEET

Summary reported financials

NOK million	Q2 2019	Q2 2018	∆
Intangible assets	190.5	198.8	(8.2)
PP&E	31.5	4.2	27.3
Goodwill	155.8	150.9	5.0
Financial assets	22.6	17.2	5.4
Other non-current assets	151.8	154.0	(2.3)
Total non-current assets	552.3	525.2	27.1
Trade receivables	1 074.8	1 054.7	20.1
Derivative financial instruments	115.4	399.9	(284.6)
Other current assets	57.4	120.3	(62.9)
Cash and cash equivalents	514.6	321.0	193.6
Total current assets	1 762.3	1 895.9	(133.7)
Total assets	2 314.6	2 421.1	(106.5)

853.2	772.5	80.8
		5.0
		(111.2)
17.1	40.1	(23.0)
19.1	1.0	18.1
280.8	391.8	(111.1)
		36.2
		-
		32.0
		(277.0)
40.8	21.9	18.9
		113.6
1 180.6	1 256.8	(76.2)
2 314.6	2 421.1	(106.5)
	77.8 166.8 563.8 - 84.4 107.2 384.3	72.8 278.0 527.5 - 52.5 384.2 270.7

CASH FLOW

Summary reported financials

NOK million	Q2 2019	Q2 2018	∆ YoY
EBITDA	142.7	114.6	28.0
Payments to obtain a contract (contract assets)	-28.2	-27.9	-0.3
Other non-cash adjustments	-7.9	-8.1	0.2
Change in fair value of financial instruments	0.1	-2.0	2.1
Changes in working capital, etc.	449.0	598.0	-149.0
Cash from operating activities	555.7	674.6	-118.9
Interest paid	-1.7	-1.6	-0.1
Interest received	5.6	3.6	2.0
Income tax paid	-	-35.1	35.1
Net cash from operating activities	559.6	641.5	-81.9
Purchases of property, plant and equipment	-1.0	-0.2	-0.8
Purchase of intangible assets	-11.5	-11.5	0.0
Net cash outflow on aquisition of subsidiares	-	-254.1	254.1
Proceeds from non-current receivables	0.6	-2.1	2.7
Net cash used in investing activities	-11.8	-267.9	256.0
Proceeds from borrowings	-13.9	278.0	-291.9
Net (outflow)/proceeds from change in overdraft facilities	-	-330.6	330.6
Dividends	-229.9	-	-229.9
Payment of lease liability	-2.3	-	-2.3
Net cash used in financing activities	-246.1	-52.6	-193.5
Net change in cash and cash equivalents	301.6	321.0	-19.4
Cash and cash equivalents at beginning	213.0	-	213.0
Cash and cash equivalents at end	514.6	321.0	193.6

FORWARD-LOOKING STATEMENTS

This presentation contains, or may be deemed to contain, statements that are not historical facts but forward-looking statements with respect to Fjordkraft's expectations and plans, strategy, management's objectives, future performance, costs, revenue, earnings and other trend information. There can be no assurance that actual results will not differ materially from those expressed or implied by these forward-looking statements due to many factors, many of which are outside the control of Fjordkraft.

All forward-looking statements in this presentation are based on information available to Fjordkraft on the date hereof. All written or oral forwardlooking statements attributable to Fjordkraft, any Fjordkraft employees or representatives acting on Fjordkraft's behalf are expressly qualified in their entirety by the factors referred to above. Fjordkraft undertakes no obligation to update this presentation after the date hereof.

For more information: Fjordkraft's Investor Relations Morten A. W. Opdal +47 970 62 526 morten.opdal@fjordkraft.no