Elmera Group ASA — Investor Presentation 2021

Nov 11, 2021

Q3 2021 PRESENTATION

Rolf Barmen (CEO) Birte Strander (CFO)

11th November

Q3 2021 HIGHLIGHTS

Rolf Barmen (CEO)

Highlights third quarter 2021

A good quarter in an extraordinary market

• 29% YoY increase in net revenue and 13% YoY increase in EBIT adj.
• The organic growth in the Norwegian market is positive again (+1,753), after a couple of challenging quarters
• Skymobil customer portfolio migrated to Fjordkraft from Q4 (01.10.2021)
• Purchase price of 1,025 NOK per subscriber, conditional of payment of first invoice

• of subscribers and final purchase price to be settled early December 2021

Key Highlights

1 # of deliveries (end of period)	Δ in # of deliveries (QoQ)
1 003 700	-198
Increase of 16 % YoY	Organic growth: -198
Volume sold 2	Gross revenue
3 398 GWh	NOK 2 384m
Increase of 42 % YoY	Increase of 305 % YoY
3 Net revenue (adj.) 2	3 EBIT (adj.) K6
NOK 367m	NOK 89m
Increase of 29 % YoY 9	Increase of 13 % YoY K7
Basic EPS (reported)	K13NIBD (cash)
NOK 0,19	NOK 668m
Decrease of -49 % YoY	K19NIBD/LTM EBITDA: 0,74

Sources: Company information

• 1) Number of deliveries excl. Extended Alliance deliveries. Number of deliveries incl. Extended Alliance deliveries: 1,085,915
• 2) Not including Alliance volume. Volume turnover for alliance partners in the quarter: 803 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

Regulatory update

• All Norwegian brands in the Fjordkraft Group are successfully certified in accordance with DNV GL's "Trygg Strømhandel" ("Safe electricity purchasing")
• Comprehensive process of certification with requirements that go further than the mandatory Norwegian legislation on several matters
• A customer compliance officer has been employed in order to monitor and further increase the focus on compliance going forward
• Fjordkraft has issued a writ regarding the termination of Fjordkraft's payment solution "Full Kontroll", which enables the customer to pay the same amount each month in order to ease out fluctuations. The service is in line with EU regulations (EU Directive EU2019/944) that is expected to be implemented also in Norway
• There are no maximum price regulations in the Nordic markets, with reference to the situation in UK where several retailers have defaulted due to the elspot price being higher than the maximum price allowed to charge end users

BUSINESS REVIEW

Rolf Barmen (CEO)

Market development

Key highlights in Q3 2021

• Extraordinarily high elspot price level, with increasing prices through the quarter representing a challenging market situation
• Significant area price differences due to limited transmission capacity
• Temperatures colder than last year in two out of three months1
• Jul: +1.6°C above normal (2.2°C warmer than 2020)
• Aug: -0.4°C below normal (-1.8°C colder than 2020)
• Sep: +0.6°C above normal (-1.1°C colder than 2020)

Weekly elspot prices (NOK/kWh)2

Sources:

• 1) Temperature figures from met.no's monthly reports. The normal has been adjusted according to the temperatures in 1991-2020
• 2) Weekly system prices in NOK from Nordpool

Segment development - Consumer

Key highlights in Q3 2021

• Organic growth of 727 deliveries in Q3 2021
• Positive organic development after a couple of challenging quarters
• Volume growth of 21% YoY, driven by increase in deliveries
• Avg. volume per delivery is decreasing 9% YoY 2,144 kWh in Q3 2021 vs. 2,356 kWh in Q3 2020

# of electricity deliveries1 ('000)

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

Segment development - Business

• Organic growth of 659 deliveries in Q3 2021
• Volume growth of 11% YoY, driven by increase in number of deliveries
• − Avg. volume per delivery decreasing 19% YoY 11,008 kWh in Q3 2021 vs. 13,622 kWh in Q3 2020

Key highlights in Q3 2021 # of electricity deliveries1 ('000)

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

Segment development - Nordic

Key highlights in Q3 2021 # of deliveries1 ('000)

• Decrease of 1,584 deliveries in Q3 2021
• The development within the strategic customer segments was positive – the decrease was due to a decrease in tender customers with low profitability
• Volume sold of 616 GWh, a consumption of 3,698 kWh per delivery

Sources: Company information

1) Number of deliveries at the end of the period

New Growth Initiatives

Mobile:

• Decrease of 3,495 mobile subscribers in Q3 2021
• An MVNO pilot will be started in mid-December
• Skymobil customer portfolio migrated to Fjordkraft from 1 October 2021
• Purchase price of 1,025 NOK per subscriber, conditional of payment of first invoice

• of subscribers and final purchase price to be settled early December 2021

Alliance:

• 17% YoY Alliance volume increase
• Growth of 367 electricity deliveries within Extended Alliance

Key highlights in Q3 2021 # 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 development

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

• Net revenue growth of 29% YoY - improvements within all segments, mainly driven by M&A

• Extraordinarily challenging market development in the quarter, with increasing and historically high elspot prices through the quarter
• Despite this challenging market, Fjordkraft has been able to grow net revenue, i.a. through the hedging strategy on variable contracts
• Last twelve months adj. net revenue growth of 19% YoY, mainly driven by M&A

Sources: Company information

EBIT adj. development

Change in adj. EBIT (NOKm)

Adj. EBIT LTM (NOKm)

• EBIT adj. increase 10 NOKm YoY
• YoY decrease in the Consumer segment Q3 2020 was affected by favourable market dynamics
• Elspot prices 645% higher than in Q3 2020
• Adj. EBIT margin decreasing 4 pp YoY

Segment overview

• Net revenue increase 12% YoY driven by volume growth
• Q3 2020 positively affected by favourable market dynamics
• EBIT adj. margin down 10 pp YoY
• LTM EBIT adj. margin of 30%

Consumer segment Business segment

• 22% increase in net revenue, driven ~50/50 by volume growth/margin improvement
• EBIT adj. margin decrease 3 pp YoY
• LTM EBIT adj. margin of 58%

Sources: Company information

Segment overview cont.

• Results in Q3 in line with guidance

• Improvement in EBIT adj. of 68% from last year
• The improvement in EBIT adj. is mainly driven by Mobile from increased volume discounts on COGS

Sources: Company information

NWC development

Net working capital1 (NOKm)

• Net working capital (NWC) is decreasing to 44 NOKm at quarter-end Q3 2021
• Large intra-quarter fluctuations due to high and increasing elspot prices
• Fjordkraft has a strong balance sheet and flexible terms for the power purchase payment. Thus, the increased price level does not represent a default risk for FK
• Capitalised commission expense increase due to effect from acquisitions – reallocation from intangible asset to commission expense

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. 46 NOKm in short-term interest bearing debt

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

| Quarterly Presentation | Q3 2021

Net cash development

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 longterm liabilities, share based payment expense, change in post-employment liabilities, payment of lease liability and adjustments made on EBITDA.

| Quarterly Presentation | Q3 2021

Hedging strategy

• In order to adapt to the demand of more predictable electricity costs, and to increase the predictability of Fjordkraft's purchase price, Fjordkraft have started to hedge a larger portion of the variable contract portfolio
• Fjordkraft utilise hedge accounting on the majority of the financial contracts related to the variable products in Norway
• The market price and the value of the financial contracts may change rapidly and the price level at quarter end does not reflect the price in the period of delivery
• Due to Fjordkraft's volume and the limited liquidity in the financial market, Fjordkraft will not disclose further details on the hedging strategy

Sources: 1) Weekly system prices in NOK from Nordpool

Outlook for 2021-20231

Group	 Targeting high-single digit net revenue growth. 2021 expected above double digit due to acquisitions in 2020  Targeting a sustainable EBIT margin of 36-38%  Ambition to act as a consolidator in a fragmented market
	Growth	 Targeting mid-single digit annual net revenue growth	Revised in Q1: Expecting a slightly negative net
Consumer	EBIT  Targeting a sustainable level of 32-34% margin		revenue growth and an EBIT margin in the area of 30% in 2021
	Growth  Targeting a sustainable level of mid-single digit growth. 2021 expected above double digit due to acquisitions in 2020
Business	EBIT margin	 Targeting a sustainable level of 52-54%	Revised in Q1: Expecting a higher EBIT margin than targeted in 2021
Nordic		Targeting an annual EBIT contribution of ~50 NOKm	Revised in Q1: Expecting an EBIT contribution of ~65 NOKm in 2021
NGI		Targeting a 50% improvement in nominal EBIT from 2020 to 2021 and a positive run-rate EBIT from late 2021	Revised in Q1: Expecting a 75% improvement in nominal EBIT from 2020 to 2021
Cap.ex.		Targeted to be in the area of NOK 65-70m annually
Leverage	 Targeting a leverage of 2-2.5x NIBD/EBITDA 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) Outlook on an organic basis, not including additional M&A transactions in the period. 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

Appendix

PROFIT AND LOSS ACCOUNT

NOK in thousands	Note	02 2021	03 2021	03 2020	YTD 2021		YTD 2020 Full Year 2020
Continuing operations
Revenue	2.3	2578081	2 3 8 7 1 7	588 991	9024749	2570627	4214727
Direct cost of sales	Z	(2170449)	(2026783)	(304540)	(7750603)	(1474361)	(2647005)
Revenue less direct cost of sales		407 631	356933	284 451	1 274 146	1096 266	1 567 722
Personnel expenses	2	(79849)	(111242)	(78494)	(302584)	(211737)	(328485)
Other operating expenses	$\overline{z}$	(115934)	(111056)	(97001)	(358236)	(319353)	(471 938)
Depreciation right-of-use assets		(4997)	(4966)	(3111)	(14626)	(9344)	(13302)
Depreciation and amortisation	2,7	(92104)	(97363)	(47877)	(284578)	(138884)	(291 872)
Total operating expenses		(292883)	(324627)	(226483)	(960024)	(679318)	(1105596)
Impairment and change in provision for onerous contracts	4	(151 288)	(428675)		(570840)		(268493)
Other gains and losses, net	4.9.10	164677	433727	(1365)	603792	3110	331 539
Operating profit		128 138	37 359	56 604	347 073	420 057	525 172
Income/loss from investments in associates
and joint ventures		1188	380	(915)	2 3 0 2	(1266)	1168
Interest income		4123	2933	3170	9556	13617	16814
Interest expense lease liability		(595)	(576)	(390)	(1829)	(1 228)	(1813)
Interest expense	12	(8775)	(9000)	(937)	(27994)	(3646)	(11982)
Other financial items, net		(1095)	(2751)	(2005)	(16768)	(4442)	(15692)
Net financial income/(cost)		(5153)	(9014)	(1077)	(34733)	3035	(11505)
Profit/ (loss) before tax		122 985	28 345	55 5 27	312341	423 092	513 667
Income tax (expense)/ income	5	(23772)	(6391)	(15366)	(57531)	(96660)	(113604)
Profit/ (loss) for the period		99 212	21954	40 161	254810	326 432	400 063
Basic earnings per share (in NOK)*	6	0.87	0.19	0.38	2,23	3.11	3.73
Diluted earnings per share (in NOK)*	6	0.86	0.19	0.38	2.23	3.08	3.69

ADJUSTED EBIT reconciliation

NOK in thousands	Q2 2021	Q3 2021	Q3 2020	YTD 2021		YTD 2020 Full year 2020
Revenue adjusted	2 5 5 9 3 4 2	2 393 927	588 991	9016220	2 548 008	4 183 361
Corporate 1)	18739	(10210)		8528	20 904	29 650
Special items 2)					1716	1716
Revenue	2578081	2 3 8 7 1 7	588 991	9024749	2 570 627	4 2 1 4 7 2 7
Direct cost of sales adjusted	(2171283)	(2026783)	(304540)	(7751436)	(1468132)	(2639876)
Corporate 1)	834			834	(6230)	(7129)
Direct cost of sales	(2170449)	(2026783)	(304540)	(7750603)	(1474361)	(2647005)
Revenue less direct cost of sales adjusted	388059	367 143	284 451	1 264 784	1079876	1543486
Corporate 1)	19573	(10210)		9362	14674	22521
Special items 2)					1716	1716
Revenue less direct cost of sales	407 631	356933	284 451	1 274 146	1096 266	1 567 722
Total operating expenses adjusted	(246954)	(278332)	(205687)	(819578)	(639302)	(935 208)
Special items 2)			(12873)	2 3 5 4	(15800)	(42213)
Depreciation of acquisitions 3)	(45929)	(46295)	(7924)	(142799)	(24216)	(128 175)
Total operating expenses	(292883)	(324627)	(226483)	(960024)	(679318)	(1105596)
Impairment and change in provision for onerous contracts	(151288)	(428675)	÷	(570840)		(268 493)
Other gains and losses 4)	164677	433727	(1365)	603792	3110	331 539
Operating profit	128 138	37 359	56 604	347073	420 057	525 172
Income/loss from investments in associates and joint ventures	1188	380	(915)	2302	(1266)	1168
Interest income	4123	2933	3170	9556	13617	16814
Interest expense lease liability	(595)	(576)	(390)	(1829)	(1228)	(1813)
Interest expense	(8775)	(9000)	(937)	(27994)	(3646)	(11982)
Other financial items, net	(1095)	(2751)	(2005)	(16768)	(4442)	(15692)
Profit/(loss) before tax	122 985	28 345	55 5 27	312 341	423 092	513 667

ADJUSTED EBIT reconciliation cont.

NOK in thousands	02 2021	03 2021	03 2020	YTD 2021		YTD 2020 Full year 2020
Special items incurred specific to:
- acquisition related costs and implementation costs			(12873)	(7485)	(15800)	(21579)
- income related to compensatory damages	$\sim$				716	716
- one off amortisation of customer contracts in acquired companies					$\overline{\phantom{a}}$	(5745)
- severance packages and other one off costs in acquired companies				6451		(14 889)
- gain from sale of trade receivables previously impaired	$\sim$			3 3 8 7
Special items			(12873)	2 3 5 4	(14083)	(40 497)

NOK in thousands	02 2021	03 2021	03 2020	YTD 2021	YTD 2020	Full year 2020
TrønderEnergi Marked acquisition	(2608)	(2608)	(5180)	(7825)	(15539)	(20718)
Oppdal Everk Kraftomsetning acquisition	(572)	(572)	(787)	(1717)	(2361)	(3148)
Vesterålskraft Strøm acquisition	(484)	(484)	(565)	(1452)	1 696)	(2261)
Innlandskraft acquisition	(31068)	(31068)		(97583)		(36254)
Troms Kraft Strøm acquisition	(10434)	(10652)	$\overline{\phantom{a}}$	(31711)	$\overline{\phantom{a}}$	(7037)
Troms Kraft Strøm acquisition - Depreciation of fixed price customer contracts	$\overline{\phantom{a}}$					(52910)
Other customer acquisitions	(762)	(910)	1392)	(2512)	(4621)	(5847)
Depreciation of acquisitions	(45929)	(46 295)	(7924)	(142799)	(24 216)	(128175)

BALANCE SHEET

NOK in thousands	Note	30 June 2021	2021	30 September 30 September 31 December 2020	2020
Assets:
Non-current assets
Deferred tax assets		36 065	35 904		37316
Right-of-use assets property, plant and equipment		91 2 32	86 939	70952	81724
Property, plant and equipment		8431	8509	8500	8409
Goodwill	7	1429576	1428246	1127050	1442849
Intangible assets	7	764 586	719119	658 559	869568
Cost to obtain contracts		214 065	246 459	161 366	172656
Investments in associates and joint ventures		13090	13470	8734	11168
Other non-current financial assets		46822	45790	39 060	63877
Total non-current assets		2 603 866	2 5 8 4 4 3 5	2074221	2 687 566
Current assets Intangible assets		1698	5319	4066	2880
		6 1 0 1	5833	1199	2 3 9 8
Inventories	8,12,14	1416226		499 592	1476927
Trade receivables Derivative financial instruments	9.10	438418	2048036 1072647	186026	193175
Other current assets		65 172	61 636	141761	167065
Cash and cash equivalents Total current assets		261 282 2 188 897	262 140 3 455 611	726 400 1 559 044	599 348 2 441 793
Total assets		4792763	6 040 046	3 633 266	5 1 29 3 59
Equity and liabilities:
Equity
Share capital		34 289	34 2 89	34 285	34 285
Share premium		991 998	991 998	991 614	991 614
Retained earnings		748824	634 352	835 904	918148
Total equity		1775112	1660640	1861803	1944047

BALANCE SHEET

NOK in thousands	Note	30 June 2021	2021	30 September 30 September 2020	31 December 2020
Non-current liabilities
Employee benefit obligations	11	84713	126747	135 456	110828
Interest-bearing long term debt	12	766 694	743 984	408148	812808
Deferred tax liabilitites		135 377	91 702	118371	130499
Lease liability - long term		73892	69552	59766	67442
Other provisions for liabilities		16399	17159		14649
Total non-current liabilites		1077075	1049143	721741	1136225
Current liabilities
Trade and other payables	14	866 070	1415035	310132	1029604
Overdraft facilities	12	136 801	87178		29400
Current income tax liabilities		64 206	77329	125 378	129098
Derivative financial instruments	9,10	187750	517530	182859	110616
Social security and other taxes		84 6 67	85894	73 5 54	143425
Lease liability - short term		20654	20813	14113	17366
Other current liabilities	13	580428	1 126 485	343 686	589578
Total current liabilities		1940 576	3 3 3 0 2 6 4	1049722	2 049 087
Total liabilities		3017651	4 379 407	1771463	3 185 312
Total equity and liabilities		4792763	6 040 046	3 633 266	5 129 359

CASH FLOW

NOK in thousands	Note	02 2021	03 2021	Q3 2020	YTD 2021	YTD 2020	Full Year 2020
Operating activities
Profit/ (loss) before tax		122 985	28 345	55 527	312 341	423092	513667
Adjustments for
Depreciation	7	57 569	58 325	18464	177732	53 245	168012
Depreciation right-of-use assets		4997	4966	3111	14626	9344	13302
Amortisation of contract assets		34 5 34	39039	29413	106 846	85 639	123860
Impairment of intangible asset	4.7	290	(61)		9762		197470
Interest income		(4123)	(2934)	(3170)	(9556)	(13617)	(16814)
Interest expense lease liability		595	577	390	1829	1 228	1813
Interest expense		8775	9001	937	27 994	3646	11982
Income/loss from investments in associates and joint ventures		(1188)	(380)	915	(2302)	1 266	(1168)
Change in long-term receivables		3441	(119)		3619		(7686)
Share based payment expense		990	1001	811	2 9 0 9	2 3 9 0	3252
Change in post-employment liabilities		2357	(521)	965	3812	29	(302)
Payments to obtain a contract		(55866)	(72064)	(38221)	(181136)	(87770)	(137280)
Changes in working capital (non-cash effect) Impairment loss recognised in trade receivables	8	(40635)	(7597)	1580	(52813)	21820	19342
Provision for onerous contracts recognised in other current liabilities	4	150 998	428736		561 079		71023
Change in fair value of derivative financial instruments	4,9,10	(164677)	(433727)	1365	(603 792)	(3110)	(331 539)
Changes in working capital
Inventories		147	268	(248)	(3435)	(256)	(1453)
Trade receivables	8	909 836	(625364)	19613	(529 460)	1050986	260 279
Purchase of el-certificates		(2039)	(123)	$\overline{a}$	(86315)	(245712)	(245712)
Non-cash effect from cancelling el-certificates		1921			85 898	263 594	263 594
Purchase of guarantees of origination		15	(4483)	(1930)	(8788)	(3503)	(4064)
Non-cash effect from disposal of guarantees of origination		2 2 7 7	802		7028	5501	7089
Other current assets		47632	3424	(2980)	105 173	(20552)	19435
Trade and other payables		(506545)	550 386	122407	394 770	(535572)	61721
Other current liabilities	13	(112489)	119841	21 056	(64888)	(341607)	(351741)
Cash generated from operations		461 794	97 336	230 005	272 931	670083	638082
Interest paid		(7485)	(9691)	(1816)	(28 236)	(5923)	(22058)
Interest received		4123	2933	3170	9556	13617	16814
Income tax paid	5				(122145)	(90024)	(113533)
Net cash from operating activities		458 432	90 578	231 358	132 106	587753	519 305

| Quarterly Presentation | Q3 2021

CASH FLOW

NOK in thousands	Note	02 2021	03 2021	03 2020	YTD 2021	YTD 2020	Full Year 2020
Investing activities
Purchase of property, plant and equipment		(312)	(894)	(989)	(2497)	(989)	(497)
Purchase of intangible assets	7	(19131)	(12654)	(12452)	(45204)	(50254)	(64767)
Proceeds from sale of intangible assets	7					10000	10000
Net cash outflow on acquisition of subsidiares				(531655)		(531655)	(1033527)
Net cash outflow on acquisition of shares in associates						(10000)	(10000)
Net (outflow)/proceeds from non-current receivables		12225	1150	545	14 4 67	146	(16985)
Net (outflow)/proceeds from other long-term liabilities		1442	872		3143		(194)
Net cash used in investing activities		(5777)	(11525)	(544550)	(30090)	(582 751)	(1115970)
Financing activities
Proceeds from overdraft facilities	12	(335847)	(49623)		57778		29 400
Proceeds from revolving credit facility	12			$\overline{\phantom{a}}$			500 000
Repayment of revolving credit facility	12						(500000)
Proceeds from issuance of shares		389			389	2730	2730
Dividends paid		(399996)			(399996)	(313717)	(313717)
Formation expenses						(10)	(10)
Proceeds from long term debt	12			460000		460 000	937000
Instalments of long term debt	12	(23 425)	(23 425)	(13900)	(70275)	(41700)	(65125)
Repayment of long term debt	12			(152900)		(152900)	(152900)
Payment of lease liability		(4834)	(4284)	(3051)	(13648)	(8539)	(12450)
Net cash used in financing activities		(763 703)	(77331)	290 149	(425 742)	(54137)	424 928
Net change in cash and cash equivalents		(311048)	1722	(23043)	(323726)	(49135)	(171738)
Cash and cash equivalents at start of period		561092	261 282	749 445	599 348	775 536	775 536
Effects of exchange rate changes on cash and cash equivalents		11239	(863)		(13483)		(4450)
Cash and cash equivalents at end of period		261 282	262 140	726 400	262 140	726 400	599 348

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