Q1 2020 PRESENTATION Rolf Barmen (CEO) Ole Johan Langenes (Acting CFO) 14 th May
Q1 2020 HIGHLIGHTS Rolf Barmen (CEO)
Highlights first quarter 2020 Strong profitability growth in an extraordinary situation Key Highlights 1 Δ in # of deliveries (QoQ) # of deliveries (end of period) • Strong financial performance with a 27% YoY increase in net revenue and 31% YoY growth in EBIT adj. 621 348 -744 • Favourable market dynamics with historically low elspot Increase of 2 % YoY Of which org. growth -744 prices and positive effects on COGS are driving the improvement 2 Volume sold Gross revenue • The solid growth in the Mobile segment continues, with 4 154 GWh NOK 1 310m more than 10k net adds in the quarter Decrease of -6 % YoY Decrease of -49 % YoY • Outlook slightly revised based on first quarter results 3 3 2 Net revenue (adj.) K6 EBIT (adj.) NOK 481m NOK 238m 9 Increase of 27 % YoY K7 Increase of 31 % YoY Basic EPS (reported) K13 NIBD (cash) NOK 1.76 (NOK 511m) Increase of 37 % YoY K19 NIBD/LTM EBITDA: -0.68 Sources: Company information 1) Number of deliveries excl. Extended Alliance deliveries. Number of deliveries incl. Extended Alliance deliveries: 658,175 2) Not including Alliance volume. Volume turnover for alliance partners Q1 2020: 1,320 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 | Quarterly Presentation | Q1 2020 3
BUSINESS REVIEW Rolf Barmen (CEO)
Operational and financial impact from Covid-19 • Both M&A activities and sales and marketing activities are continuing at a high level despite the Covid-19 situation • Every EVP monitor and report the risk situation in their division on a weekly basis • Accounts receivables are monitored from day to day • We ensure that our customers know they can contact us regarding delay of payment – our goal is to balance low losses with CSR • We monitor our around 400 employees and consultants daily regarding their health and well-being, making sure operations resume as normal • Slight decrease in consumption in the Business segment due to reduced activity • Increased voice activity in the Mobile segment driving COGS and reduces margins | Quarterly Presentation | Q1 2020 5
Market development Key highlights in Q1 2020 Weekly elspot prices (NOK/kWh) 2 • Elspot prices have decreased throughout the 0,6 quarter, ending at a historically low level 0,5 0,4 • Temperatures warmer than both the normal and 0,3 last year in three out of three months 1 0,2 - Jan: +6.1°C above normal (4.9°C warmer than 2019) 0,1 - Feb: +4.0°C above normal (0.5°C warmer than 2019) 0,0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 - Mar: +2.4°C above normal (1.2°C warmer than 2019) 2019 2020 Forward Temp – deviation from normal (°C) 1 • The regulator recently published the market churn 8 figures for 2019, showing a 21% annual churn in the consumer segment and 14% in the business 6 segment 3 4 2 0 -2 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Des Sources: 1) Temperature figures from met.no’s monthly reports 2019 2020 2) Weekly system prices in NOK from Nordpool, forward prices from Montel 3) The Norwegian Water and Energy Directorate’s supplier change statistics. The regulator also states that the 2019 figures are not comparable with previous years, as numbers from 2018 and earlier have been overreported | Quarterly Presentation | Q1 2020 6
Segment development - Consumer # of electricity deliveries 1 (‘000) Key highlights in Q1 2020 • Decrease of 1,717 deliveries in Q1 2020 600 • Volume growth of 1% YoY, driven by increase in # of 400 deliveries 542 544 542 530 532 - Avg. volume per delivery is down 1% YoY 200 4,287 kWh in Q1 2020 vs. 4,340 kWh in Q1 2019 0 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 • Mobile subscription overview now included in the Fjordkraft app and consumers with solar panels are Volume (GWh) able to virtually save excess production for later use 2 500 8 000 2 000 6 000 1 500 4 000 2 299 2 328 2 158 1 000 1 381 2 000 1 232 500 0 0 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Quarter LTM Sources: Company information 1) Number of electricity deliveries at the end of the period | Quarterly Presentation | Q1 2020 7
Segment development - Business # of electricity deliveries 1 (‘000) Key highlights in Q1 2020 • Positive organic growth in the segment 80 - Net additions in Q1 2020 were 973 60 • Volume decrease 13% YoY driven by decrease in avg. consumption per delivery from mild weather, 40 79 78 78 76 76 fewer tender customers and Covid-19 restrictions 20 - Avg. volume per delivery decreasing -16% YoY 23,189 kWh in Q1 2020 vs. 27,653 kWh in Q1 2019 0 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 • New and environmental oriented concept Volume (GWh) “Klimasmart”, including solar panels, heat pumps and monitoring services, has been well received by 2 500 business customers 6 000 2 000 1 500 4 000 2 103 1 000 1 844 1 826 2 000 1 316 1 075 500 0 0 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Quarter LTM Sources: Company information 1) Number of electricity deliveries at the end of the period | Quarterly Presentation | Q1 2020 8
New Growth Initiatives # of Mobile subscribers 1 (‘000) Key highlights in Q1 2020 • The strong growth in the number of Mobile 120 subscribers continues. Well on the way towards the targeted 125 thousand subscribers at the end of 80 2020 110 - Growth of 10,025 subscribers in Q1 2020 100 92 40 81 72 0 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Volume Alliance (GWh) • 13% YoY Alliance volume decrease, as Vesterålskraft is now included in the Consumer and 2 000 6 000 Business segments and due to mild weather 1 500 • One new Extended Alliance partner implemented 4 000 and the first ever broadband customers handled in 1 000 the Fjordkraft Factory on behalf of Alliance Partners 1 511 2 000 1 320 1 297 this quarter 500 858 677 0 0 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Quarter LTM Sources: Company information 1) Number of mobile subscribers at the end of the period | Quarterly Presentation | Q1 2020 9
FINANCIAL REVIEW Ole Johan Langenes (Acting CFO)
Strong net revenue growth Change in adj. net revenue (NOKm) Adj. net revenue LTM (NOKm) +27% 1 600 600 +20% 500 (3) 11 1 200 95 400 800 300 1 387 1 284 481 1 216 1 184 1 152 200 378 400 100 0 0 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q1 19 Consumer Business NGI Q1 20 • Adj. net revenue growth driven by margin improvement – Consumer segment with the biggest impact • Favourable market dynamics with historically low elspot prices and positive effects on COGS are driving the improvement YoY Last twelve months adj. net revenue improvement driven by margin improvement 1 YoY • Sources: Company information 1) New Growth Initiatives figures are excluded from the calculations, as high volumes with very low margins distorts the analysis | Quarterly Presentation | Q1 2020 11
Continued increase in EBIT adj. Change in adj. EBIT (NOKm) Adj. EBIT LTM (NOKm) +29% 300 +31% 600 50% 250 0 (8) 40% 63 200 39% 400 38% 38% 37% 37% 30% 150 547 238 491 20% 446 450 100 425 200 182 10% 50 Adj. EBIT Adj. EBIT margin: 48% margin: 49% 0 0 0% Q1 19 Consumer Business NGI Q1 20 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 EBIT LTM (adj.) LTM adj. EBIT margin • EBIT improvement of 56 NOKm with the Consumer segment as the driver for the increase • The increase in OPEX primarily driven by sales and marketing cost, administrative costs and expected increase in losses on receivables due to Covid-19 • Adj. EBIT margin increasing 1 pp YoY. Adj. EBIT margin LTM is increasing 2 pp YoY and 1 pp quarter over quarter Sources: Company information | Quarterly Presentation | Q1 2020 12
Segment overview Consumer segment Business segment New Growth Initiatives Adj. net revenue (NOKm) Adj. net revenue (NOKm) Adj. net revenue (NOKm) 400 400 400 +36% 300 300 300 +11% 200 200 200 -19% 362 267 264 100 100 100 191 180 108 97 95 73 70 14,3 10,4 9,1 12,4 11,5 0 0 0 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Adj. EBIT (NOKm) Adj. EBIT (NOKm) Adj. EBIT (NOKm) 200 60% 200 80% 150 52% 47% 60% 55% 55% 39% 52% 150 150 60% 100 47% 33% 40% 100 21% 100 40% 50 189 20% 126 104 50 50 20% 0 32.2 63 59 59 38 50 40 33 -2,9 -4,7 -8,6 -6,1 -10,4 72.7 0 0% 0 0% -50 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 EBIT (adj.) EBIT margin adj. EBIT (adj.) EBIT margin adj. • Increase in adj. net revenue YoY. Margin • Increase in adj. net revenue is driven by • Adj. net revenue and adj. EBIT decrease improvement accounting for more than improved margins, primarily from power primarily from reduced margins within 95% of the increase. Favourable market sales Mobile. Increased call activity from dynamics driving the growth Covid-19 driving COGS • 5 pp margin contraction driven by • 5 pp margin expansion driven by net expected increased losses on receivables • Solid growth in # of Mobile subscribers revenue growth due to Covid-19 Sources: Company information | Quarterly Presentation | Q1 2020 13
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