Q4 2018 PRESENTATION Rolf Barmen (CEO) Birte Strander (CFO) Oslo, 14 th February
Q4 2018 HIGHLIGHTS Rolf Barmen (CEO)
Highlights fourth quarter 2018 Strong performance in a competitive quarter Key Highlights 2 # of deliveries (end of period) Net change in # of deliveries • Adjusted net revenue was NOK 304.6m, +15% YoY 604 973 8 687 • Adjusted EBIT increased +12% YoY and was NOK 107.1m Increase of 14 % YoY Of which org. growth: 2 108 • +14% YoY growth in deliveries, of which 2% organic 3 Volume sold Gross revenue Quarter over quarter growth: - Consumer & Business: +8,687 3 961 GWh NOK 2 179,1m - Extended Alliance: -59 Increase of 9 % YoY Increase of 55 % YoY - Mobile Subscriptions: +4,763 4 4 2 Net revenue (adj.) K6 EBIT (adj.) • The Oppdal and Etne acquisitions successfully implemented during Q4 2018 NOK 304,6m NOK 107,1m • Gross revenue increasing +55% YoY, reflecting volume growth 9 Increase of 15 % YoY K7 35 % Adj. EBIT margin (this q.) (+9%) and significantly higher elspot prices than last year (+56%) 1 EPS (reported) K13 NIBD (cash) NOK 0,68 (NOK 131,2m) Increase of 5 % YoY K19 NIBD/LTM EBITDA: -0,27 Sources: Company information 1) Arithmetic average difference in Nordpool’s daily system prices in NOK between Q4 2018 and Q4 2017 2) Number of deliveries excl. Extended Alliance deliveries. Number of deliveries incl. Extended Alliance deliveries: 638,437 3) Not including Alliance volume. Volume turnover for alliance partners Q4 2018: 1,358 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) | Quarterly Presentation | Q4 2018 3
BUSINESS REVIEW Rolf Barmen (CEO)
Market development Key highlights in Q4 2018 Weekly elspot prices (NOK/kWh) 3 • Increasing prices throughout the fourth quarter 0,6 - Q4 2018 elspot prices 56% higher than in Q4 2017 1 0,5 • Warmer than normal weather in three out of three 0,4 months 2 0,3 - October: +0.5°C above normal 0,2 0,1 - November: +3.7°C above normal 0,0 - December: +2.2°C above normal 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 2017 2018 • NVE figures for Q3 shows an increasing churn in Market churn (LTM) 4 both the Consumer and Business segment 25% 21% 20% 15% 16% 10% 5% 0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Sources: 15 16 16 16 16 17 17 17 17 18 18 18 1) Arithmetic average difference in Nordpool’s daily system prices in NOK between Q4 2018 and Q4 2017 Consumer Business 2) Temperature figures from met.no’s monthly reports 3) Weekly system prices in NOK from Nordpool 4) Figures from the Norwegian Water Resources and Energy directorate | Quarterly Presentation | Q4 2018 5
Segment development - Consumer # of electricity deliveries 1 (‘000) Key highlights in Q4 2018 • Strong organic development quarter over quarter 600 - Net additions in Q4 2018 were 9.460, of which 3.698 500 organic 400 - The deliveries from Oppdal and Etne acquisitions 300 529,3 519,9 519,8 included as of Q4 2018, amounting to 5,762 468,5 465,7 200 deliveries 100 • Volume growth of 7% YoY driven by growth in # of 0 deliveries Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 - Avg. volume per delivery decreasing -5% YoY Volume (GWh) 3,959 kWh in Q4 2018 vs. 4,184 kWh in Q4 2017 2 500 7 500 7 000 2 000 6 500 1 500 6 000 2 320 5 500 2 077 1 000 1 940 5 000 1 376 1 126 500 4 500 0 4 000 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Quarter LTM Sources: Company information 1) Number of electricity deliveries at the end of the period | Quarterly Presentation | Q4 2018 6
Segment development - Business # of electricity deliveries 1 (‘000) Key highlights in Q4 2018 • Decrease in deliveries driven by loss of tender 90 contract - limited financial impact 80 70 - Net additions in Q4 2018 were -773 60 50 - The deliveries from Oppdal and Etne acquisitions 40 76,4 75,8 75,7 included as of Q4 2018, amounting to 817 62,8 63,7 30 deliveries 20 10 • Volume growth of 12% YoY driven by growth in # of 0 deliveries Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 - Avg. volume per delivery decreasing -9% YoY Volume (GWh) 24,771 kWh in Q4 2018 vs. 27,250 kWh in Q4 2017 2 500 7 000 6 500 2 000 6 000 1 500 5 500 1 000 1 968 1 884 1 685 5 000 1 328 1 118 500 4 500 0 4 000 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Quarter LTM Sources: Company information 1) Number of electricity deliveries at the end of the period | Quarterly Presentation | Q4 2018 7
New Growth Initiatives # of Mobile subscribers 1 (‘000) Key highlights in Q4 2018 • The organic growth in mobile subscribers continues 70 - Growth of 4,763 subscribers in Q4 2018 60 50 • Continued positive development in mobile margins 40 66,0 61,2 30 56,9 49,4 • 16% YoY Alliance volume growth 20 38,3 • Flat development in Extended Alliance (-59 10 deliveries), as Statnett’s Elhub project prevents 0 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 implementation of new partners until 1 May 2019 Volume Alliance (GWh) 2 000 5 000 4 000 1 500 3 000 1 000 1 603 2 000 1 358 1 167 500 910 1 000 713 0 0 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Quarter LTM Sources: Company information 1) Number of mobile subscribers at the end of the period | Quarterly Presentation | Q4 2018 8
FINANCIAL REVIEW Birte Strander (CFO)
Continued growth in adj. net revenue Change in adj. net revenue (NOKm) Adj. net revenue LTM (NOKm) +18% +15% 1 200 350 0 300 1 000 13 27 250 800 200 600 1 088 1 048 150 305 1 005 968 924 264 400 100 200 50 0 0 Q4 17 Consumer Business NGI Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 • Adjusted net revenue increased +15% YoY • Net revenue growth driven by the Consumer and Business segments ~ 40/60 split between improved margins and volume growth 1 • • Variable products positively affected in Q4 by the price drop at the end of Q3, however partly offset by increasing prices throughout Q4 • LTM adjusted net revenue increasing with +18% YoY • ~ 40/60 split between improved margins and volume growth 1 • 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 | Quarterly Presentation | Q4 2018 10
Solid adj. EBIT performance Change in adj. EBIT (NOKm) Adj. EBIT LTM (NOKm) +12% +10% 120 450 45% 2 400 40% 100 11 (1) 350 35% 38% 37% 80 36% 36% 36% 300 30% 250 25% 60 107 200 20% 390 96 379 364 356 361 40 150 15% 100 10% Adj. EBIT Adj. EBIT 20 margin: 36% margin: 35% 50 5% 0 0% 0 Q4 17 Consumer Business NGI Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 EBIT LTM (adj.) LTM adj. EBIT margin • 12% increase in adjusted EBIT YoY • EBIT adj. improvement mainly driven by the Business segment • 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 10% • Positive development in adj. LTM EBIT margin with a flat trend over the last three quarters Sources: Company information | Quarterly Presentation | Q4 2018 11
Adj. net revenue and adj. EBIT by segment – quarterly Consumer segment Business segment New Growth Initiatives Adj. net revenue (NOKm) Adj. net revenue (NOKm) Adj. net revenue (NOKm) 250 +15% 250 250 200 200 200 150 150 150 +18% +3% 223 213 100 100 100 185 174 156 50 50 50 82 83 70 65 62 9,0 9,1 5,6 6,7 9,3 0 0 0 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Adj. EBIT (NOKm) Adj. EBIT (NOKm) Adj. EBIT (NOKm) 150 46% 50% 150 80% 120 39% 61% 100 34% 40% 52% 32% 49% 60% 48% 46% 80 100 100 30% 23% 60 40% 40 20% 103 50 50 20 73 72 20% 10% 55 32.2 50 43 35 0 32 31 31 72.7 0 0% 0 0% -9,8 -6,5 -7,7 -7,8 -7,3 -20 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 EBIT (adj.) EBIT margin adj. EBIT (adj.) EBIT margin adj. • Increase in adj. net revenue driven • Volume growth accounting for ~60% of the • Adj. net revenue growth driven by ~50/50 by improved margins and volume adj. net revenue improvement Mobile growth • 6 pp adj. EBIT margin improvement YoY, • Continued positive development in • 5 pp adj. EBIT margin contraction YoY driven by scale and net revenue growth mobile margins - reduced data cost from Telenor with a positive impact • YoY adj. EBIT improvement driven by Mobile Sources: Company information | Quarterly Presentation | Q4 2018 12
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