Elmera Group ASA

Investor Presentation • Nov 7, 2018

Q3 2018 PRESENTATION

Rolf Barmen (CEO) Birte Strander (CFO)

Oslo, 7th November

Q3 2018 HIGHLIGHTS

Rolf Barmen (CEO)

Highlights third quarter 2018

Another solid quarter

• Adjusted net revenue was NOK 227.2m, +23% YoY
• Adjusted EBIT increased +34% YoY and was NOK 58.3m
• +14% YoY growth in deliveries, of which 2% organic Quarter over quarter growth:
• Consumer & Business: +659
• Extended Alliance: +7,672
• Mobile Subscriptions: +4,282
• Gross revenue increasing +74% YoY, reflecting volume growth and significantly higher elspot prices than last year (+81%)1
• Acquisition of Etne customer portfolio
• About 1,600 deliveries
• Closing 30 October
• Transaction details comprised by confidentiality by seller's request

Key Highlights
2 # of deliveries (end of period)	Net change in # of deliveries
596 286	659
Increase of 14 % YoY	Of which org. growth 659
3 Volume sold	Gross revenue
2 244 GWh	NOK 1 328,5m
Increase of 10 % YoY	Increase of 74 % YoY
4 Net revenue (adj.) 2	4 EBIT (adj.) K6
NOK 227,2m	NOK 58,3m
Increase of 23 % YoY 9	26 % Adj. EBIT margin (this q.) K7
EPS (reported)	K13Net debt / (Net cash)
NOK 0,25	(NOK 133,4m)
Decrease of -25 % YoY	K19NIBD/LTM EBITDA: -0,28

Sources: Company information

• 1) Arithmetic average difference in Nordpool's weekly system prices in NOK between Q3 2018 and Q3 2017
• 2) Number of deliveries excl. Extended Alliance deliveries. Number of deliveries incl. Extended Alliance deliveries: 629,809
• 3) Not including Alliance volume. Volume turnover for alliance partners Q3 2018: 713 GWh
• 4) Adj. Net revenue and EBIT are reported figures adjusted for any estimate deviations on sales and distribution of electricity related to previous reporting periods and unallocated items (incl. unrealised gains and losses on financial derivatives, depreciations from acquisitions and non-recurring cost/revenue)

"We need more companies like Fjordkraft"

– The United Nations Climate Change secretariat

Winner of United Nations "Momentum for Change" Climate Action Award

• The scalability and reach of the Klimanjaro initiative awarded Fjordkraft the United Nations "Momentum for Change" Climate action award of 2018
• Fjordkraft is the first Norwegian company to receive the award
• Through Fjordkraft's efforts towards a climate neutral supply chain, annual CO2 emissions of about 56,000 tonnes are now being offset
• The award ceremony will take place at the UN Climate Change Conference in Katowice, Poland, 2-14 December 2018
• For more information, please see: www.fjordkraft.no/klimanjaro

Maintaining the position as the no. 1 electricity retail brand in the consumer segment in Norway

Customer satisfaction1,2

1) From Kantar TNS Q3 2018 survey

2) Customer satisfaction for the five brands with the highest brand awareness

3) Perceived brand market share from Kantar TNS survey. Figures may differ from actual market share

Market share1,3

BUSINESS REVIEW

Rolf Barmen (CEO)

Market development

Key highlights in Q3 2018

• The volatility continues significant drop in prices in last half of September
• Q3 2018 elspot prices 81% higher than in Q3 20171
• Fjordkraft has no exposure to the Nasdaq Clearing loss following the Einar Aas trade
• Warmer than normal weather in three out of three months2
• July: +4.3°C above normal
• August: +0.6°C above normal
• September: +1.5°C above normal
• Two new market churn reports from NVE released since the Q2 presentation
• Q2 figures were published 9 October, showing an increasing trend in both the Consumer and Business segment

Sources:

• 1) Arithmetic average difference in Nordpool's weekly system prices in NOK between Q3 2018 and Q3 2017
• 2) Temperature figures from met.no's monthly reports
• 3) Historical elspot prices are from Nordpool. Forward prices are from Nasdaq OMX Commodities 31 October 2018, using a conversion ratio of EUR/NOK 9.5458.
• 4) Figures from the Norwegian Water Resources and Energy directorate

Weekly elspot prices (NOK/kWh)3

Segment development - Consumer

• Flat organic development quarter over quarter
• Net additions in Q3 2018 were -23, all of which organic
• The deliveries from the Oppdal and Etne acquisitions will be included in Q4 2018
• Volume growth of 12% YoY driven by growth in # of deliveries
• Avg. volume per delivery decreasing -1% YoY 2,166 kWh in Q3 2018 vs. 2,182 kWh in Q3 2017
• Signed an agreement with Consort a telemarketing and door-to-door sales channel with operations primarily in the Trøndelag area

Key highlights in Q3 2018 # of electricity deliveries1 ('000)

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

Segment development - Business

• Continued organic growth
• Net additions in Q3 2018 were 682, all of which organic
• Volume growth of 7% YoY driven by growth in # of deliveries.
• Avg. volume per delivery decreasing -15% YoY 14,693 kWh in Q3 2018 vs. 17,220 kWh in Q3 2017. Drop in avg. volume per delivery because of relatively lower volume per delivery in TEM portfolio

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

Key highlights in Q3 2018 # of electricity deliveries1 ('000)

New Growth Initiatives

• The organic growth in mobile subscribers continues
• +4,282 subscribers in Q3 2018
• Milestone: First quarter with positive net revenue from Mobile
• Launch of new mobile app in July, giving customers a complete overview of their subscription
• ~22k downloads since the launch
• 24% YoY Alliance volume growth
• Extended Alliance grew by 7,672 deliveries in Q3 2018, comprising 33,523 deliveries at the end of the quarter

Sources: Company information

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

Key highlights in Q3 2018 # of Mobile subscribers1 ('000)

Volume Alliance (GWh)

FINANCIAL REVIEW

Birte Strander (CFO)

Continued growth in adj. net revenue

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

• Adjusted net revenue increased +23% YoY
• Increase in adj. net revenue across all segments
• ~ 50/50 split between improved margins and volume growth1
• September particularly strong for the variable products in the consumer segment due to the significant drop in elspot prices
• LTM adjusted net revenue increasing with +18% YoY
• ~ 40/60 split between improved margins and volume growth1
• 1 pp of the increase is related to New Growth Initiatives

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)

• 34% increase in adjusted EBIT YoY, positive contribution from all segments
• Relative improvement in Business and NGI segments particularly strong
• Adj. OPEX increase YoY mainly in the consumer segment, driven by sales and marketing costs, customer service costs and other variable costs
• All time high adj. EBIT LTM, with a YoY increase of 4%
• Positive development in adj. LTM EBIT margin with a flat trend over the last quarters

Sources: Company information

Adj. net revenue and adj. EBIT by segment – quarterly

• Increase in adj. net revenue driven ~40/60 by improved margins and volume growth
• Variable products positively impacted by elspot price drop in September
• 2 pp adj. EBIT margin contraction YoY. Stronger than expected

^{52 70 82 62 65} 0 50 100 150 200 250 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Adj. net revenue (NOKm) Adj. net revenue (NOKm) Adj. net revenue (NOKm) 72.7 32.2 ^{23 32 50 31 31} 43% 46% 61% 49% 48% 0% 20% 40% 60% 80% -30 20 70 120 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 EBIT (adj.) EBIT margin adj.

• Succeeding in improving margins from both power sales and value added services
• Volume growth accounting for ~30% of the adj. net revenue improvement

• 5 pp adj. EBIT margin improvement YoY

• Adj. net revenue improvement split ~75/25 between Mobile and Alliance

• New product range and growth in # of subscribers driving the Mobile improvement
• YoY adj. EBIT improvement mainly driven by Mobile

Sources: Company information

Net working capital reduced from last quarter due to seasonality

Net working capital1 (NOKm)

• Net working capital (NWC) reduced by 57 NOKm from last quarter, as volume is seasonally lower. Volume effect partly offset by 30% higher elspot prices in Q3 2018 vs Q2 2018
• NWC is increasing 159 NOKm YoY. Prices in Q3 2018 81% higher than Q3 2017 and volume growth (+13%2) are the main drivers
• The drop in capitalised commission expense is due to an adjustment of the TEM purchase price allocation
• Underlying sales commissions spending is in line with amortisation in Q3 2018

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 (that is, all items under current liabilities, except proposed dividend (zero according to IFRS))

2) Incl. Alliance volume

Improved net cash position

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

• Net cash position of 133 NOKm at the end of Q3 18. Improved by 90 NOKm from end of Q2 18
• Long term debt from TEM acquisition amounting to 264 NOKm at the end of Q3 18
• Net working capital reduced by 57 NOKm
• Solid underlying cash generation

Sources: Company information

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

2) Other includes CAPEX related to M&A and customer portfolios, interest, tax and adjustments made on EBITDA

OUTLOOK

Rolf Barmen (CEO)

Outlook

Market development:

• Elspot prices are expected on a higher level than 2017 for the rest of the year1
• Elhub market freeze from 1 September 2018 to 1 May 2019
• New Extended Alliance partners will not be implemented until after the freeze period

Margin outlook:

• Maintaining 2018 targets for the Business and NGI segments
• Consumer expected stronger for 2018 than earlier indicated

Financial targets and roadmap to growth for 2019 and onwards:

• Will be presented at the Capital Markets Day in February 2019

Appendix

Product mix

Consumer segment1 Business segment1

Sources: Company information 1) Based on number of deliveries at the end of Q3 2018

PROFIT AND LOSS ACCOUNT

Summary reported financials

NOK million	Q3 2018	Q3 2017	∆ YoY
Operating income	1 328,5	764,5	564,0
Cost of sales	-1 101,3	-579,7	-521,7
Net revenues	227,2	184,9	42,3
Personnel expenses	-58,5	-46,2	-12,3
Other operating expenses	-85,7	-68,4	-17,4
Operating expenses	-144,2	-114,5	-29,7
Other gains and losses, net	-4,8	0,5	-5,4
EBITDA	78,1	70,9	7,2
Depreciation & amortization	-43,6	-27,3	-16,2
Operating profit (EBIT)	34,5	43,5	-9,0
Net financials	1,9	2,3	-0,4
Profit / loss before taxes	36,4	45,8	-9,5
Taxes	-10,3	-11,0	0,7
Profit / loss for the period	26,0	34,8	-8,8
Basic earnings per share (in NOK)	0,25	0,33	-0,1
Diluted earnings per share (in NOK)	0,25	0,33	-0,1

ADJUSTED EBIT reconciliation

NOK in thousands	Q3 2018	Q3 2017	YTD 2018
Adjusted operating profit (before unallocated and estimate deviations)	58 282	43 443	283 037
Adjustment: (Positive)/negative estimate deviations previous year 1)	-	-	2 592
Other gains & losses 2)	-4 847	510	-7 896
Non-recurring 3)	-6 925	-	-19 522
Depreciation of acquisitions 4)	-12 022	-427	-23 043
Operating profit	34 487	43 526	235 169
Interest income	4 146	3 232	11 681
Interest expense	-1 669	-59	-3 329
Other financial items, net	-596	-868	-3 776
Profit/(loss) before tax	36 368	45 832	239 744
3) Non-recurring items consists of one-time items as follows:
NOK in thousands	Q3 2018	Q3 2017	YTD 2018
Non-recurring items incurred specific to:
- the process of listing the company on Oslo Stock Exchange	-300	-	-11 323
- acquisition related costs	-4 514	-	-9 708
- the launch of new products and services	-	-	-
- compensatory damages	-	-	4 080
- legal costs related to the compensatory damages above	-	-	-460
- strategic costs related to markets abroad	-2 111	-	-2 111
Non-recurring	-6 925	-	-19 522

EBIT adjustments

The following adjustments are made to the reported EBIT, in order to give a better representation of underlying performance:

1) Estimate deviations from previous years:

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.

2) Other gains and losses, net:

Consist of gains and losses on derivative financial instruments associated with the purchase and sale of electricity.

3) Non-recurring items:

Non-recurring one-time items. These are described in the table on the following page.

4) Depreciation of acquisitions:

Depreciation related to customer portfolios and acquisitions of companies. The Group has decided to report the operating profit of the segments adjusted for depreciation of acquisitions, as this, in the Group's opinion, better represents underlying performance. In order to accommodate this, historically reported figures have been adjusted accordingly.

BALANCE SHEET

Summary reported financials

NOK million	Q3 18	Q3 17	∆
Intangible assets	186,6	74,9	111,7
PP&E	4,5	3,8	0,7
Goodwill	155,8	-	155,8
Financial assets	18,7	14,1	4,6
Other non-current assets	145,7	128,5	17,2
Total non-current assets	511,3	221,2	290,1
Trade receivables	1 206,4	658,4	548,0
Derivative financial instruments	297,0	100,4	196,6
Other current assets	73,2	78,6	(5,4)
Cash and cash equivalents	397,5	409,0	(11,5)
Total current assets	1 974,0	1 246,4	727,7
Total assets	2 485,3	1 467,6	1 017,8
Total equity	810,3	668,3	142,0
Net employee defined benefit liabilities	62,2	45,8	16,4
Interest-bearing long term debt	264,1	-	264,1
Deferred tax liabilities	32,9	18,9	13,9
Other provisions	1,0	-	1,0
Total non-current liabilities	360,1	64,7	295,4
Trade payables	620,1	314,6	305,5
Overdraft facilities	-	-	-
Current income tax liabilities	68,0	39,0	29,0
Derivative financial instruments	286,1	91,9	194,1
Social security and other taxes	14,5	23,1	(8,6)
Other current liabilities	326,3	265,9	60,4
Total current liabilities	1 314,9	734,6	580,4
Equity and liabilities	2 485,3	1 467,6	1 017,8

CASH FLOW

Summary reported financials

NOK million	Q3 2018	Q3 2017	∆ YoY
EBITDA	78,1	70,9	7,2
Other non-cash adjustments	4,8	3,2	1,6
Change in fair value of financial instruments	4,8	-0,5	5,4
Changes in working capital, etc.	35,3	297,4	-262,1
Cash from operating activities	123,0	371,0	-248,0
Interest paid	-1,7	-0,1	-1,6
Interest received	4,1	3,2	0,9
Income tax paid	-0,4	-	-0,4
Net cash from operating activities	125,1	374,2	-249,0
Purchases of property, plant and equipment	-0,5	-0,3	-0,2
Purchase of intangible assets	-7,1	-6,9	-0,1
Payments to obtain a contract (contract assets)	-25,7	-29,6	3,9
Net cash outflow on aquisition of subsidiares	-	-	-
Proceeds from non-current receivables	-1,4	0,5	-2,0
Net cash used in investing activities	-34,8	-36,3	1,6
Proceeds from borrowings	-13,9	-	-13,9
Net (outflow)/proceeds from change in overdraft facilities	-	-	-
Dividends	-	-	-
Net cash used in financing activities	-13,9	-	-13,9
Net change in cash and cash equivalents	76,5	337,9	-261,4
Cash and cash equivalents at beginning	321,0	71,2	249,8
Cash and cash equivalents at end	397,5	409,0	-11,5

Depreciation profile of the TrønderEnergi Marked acquisition

NOK in millions	2018	2019	2020	2021	2022	2023	2024	2025	2026	2027	2028	2029	2030	2031	2032	2033	2034	2035	2036	2037	2038
Annual depreciation		30,8 32,8 20,7 12,0			7,3	4,9	3,4	2,3	1,6	1,1	0,7	0,5	0,3	0,2	0,2	0,1	0,1	0,1	0,0	0,0	0,0
Accumulated depreciation																	30,8 63,5 84,2 96,3 103,6 108,5 111,9 114,2 115,8 116,9 117,6 118,1 118,5 118,7 118,9 119,0 119,0 119,1 119,1 119,2 119,2

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