Elmera Group Asa · OSL:ELMRA
Elmera Group Asa — Investor Day (February 2020)
78 slides from Elmera Group Asa's investor day presentation, Feb 13, 2020
Slide 1: Today's agenda
Today’s agenda Start Finish Time (min) Subject Presenter 08:00 08:15 15 1. Financial update Q4 2019 Rolf Barmen/Ole Johan Langenes 08:15 08:25 10 Q&A 08:25 08:50 25 2. CEO state of the union Rolf Barmen 08:50 09:10 20 3. Regulations and M&A Arnstein Flaskerud 09:10 09:25 15 Break 09:25 09:35 10 4. I
Slide 2: Q4 2019 Presentation
Q4 2019 PRESENTATION Rolf Barmen (CEO) Ole Johan Langenes (Acting CFO) Oslo, 13th February 2
Slide 3: Q4 2019 Highlights
Q4 2019 HIGHLIGHTS Rolf Barmen (CEO) 3
Slide 4: Highlights fourth quarter 2019
Highlights fourth quarter 2019 Favourable market dynamics driving strong profitability growth Key Highlights 1 • Net revenue growth across all segments. Margin improvement is # of deliveries (end of period) Δ in # of deliveries (QoQ) the main driver for the increase 622 092 2 637 • Particularly favo
Slide 5: Business Review
BUSINESS REVIEW Rolf Barmen (CEO) 5
Slide 6: Market development
Market development Key highlights in Q4 2019 Weekly elspot prices (NOK/kWh)2 • Increase in elspot prices during the first part of the 0,6 quarter, then decrease in prices through 0,5 November and December 0,4 0,3 • Temperatures colder than normal in two out of 0,2 three months. Two out of three mont
Slide 7: Segment development - Consumer
Segment development - Consumer Key highlights in Q4 2019 # of electricity deliveries1 (‘000) • Continued organic growth 600 - Net additions in Q4 2019 were 2,169, all of which organically 400 • Volume growth of 4% YoY, with increase in # of deliveries being the driver for the growth 529 530 532 542
Slide 8: Segment development - Business
Segment development - Business Key highlights in Q4 2019 # of electricity deliveries1 (‘000) • Positive development in the segment 80 - Net additions in Q4 2019 were 468, all of which organically 60 • Volume decrease 2% YoY driven by decrease in avg. consumption per delivery because of loss of 40 76
Slide 9: New Growth Initiatives
New Growth Initiatives Key highlights in Q4 2019 # of Mobile subscribers1 (‘000) • Strong growth in the number of Mobile subscribers, 120 reaching the 100k subscriber milestone at the end of the quarter 80 - Growth of 7,756 subscribers in Q4 2019 92 100 • Fjordkraft Mobile awarded best call centre i
Slide 10: Financial Review
FINANCIAL REVIEW Ole Johan Langenes (Acting CFO) 10
Slide 11: Net revenue improvement across all segments
Net revenue improvement across all segments Change in adj. net revenue (NOKm) Adj. net revenue LTM (NOKm) +22% 1 600 400 +18% 13 3 52 300 1 200 200 800 372 305 1 184 1 216 1 284 1 088 1 152 100 400 0 0 Q4 18 Consumer Business NGI Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 • Adj. net revenue growth driven a
Slide 12: Continued increase in EBIT adj.
Continued increase in EBIT adj. Change in adj. EBIT (NOKm) Adj. EBIT LTM (NOKm) 200 +26% +38% 600 50% 150 32 40% 7 1 400 37% 38% 37% 38% 36% 30% 100 148 450 491 20% 200 425 446 390 50 107 Adj. EBIT Adj. EBIT 10% margin: 35% margin: 40% 0 0 0% Q4 18 Consumer Business NGI Q4 19 Q4 18 Q1 19 Q2 19 Q3 19
Slide 13: Segment overview
Segment overview Consumer segment Business segment New Growth Initiatives Adj. net revenue (NOKm) Adj. net revenue (NOKm) Adj. net revenue (NOKm) 300 +24% 300 300 200 200 200 +15% 267 +33% 264 100 213 191 180 100 100 83 97 73 70 95 9,3 14,3 10,7 9,1 12,4 0 0 0 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1
Slide 14: Negative NWC driven by positive effect from el. cert and operational improvements
Negative NWC driven by positive effect from el. cert and operational improvements Net working capital1 (NOKm) 1 200 • Net working capital (NWC) is increasing by 31 NOKm from last quarter, driven by seasonally higher volumes and elspot prices 1 000 142 • Volume increase 73% from last quarter2 800 151
Slide 15: Strong underlying cash generation
Strong underlying cash generation Change in net cash Q-o-Q (NOKm) 800 700 (13) (29) 600 (59) 190 500 (31) 400 OpFCF1 before tax and change in NWC («Cash EBIT adj.»): NOK 148m 300 581 493 200 100 - Net cash 30.09.19 Change in NWC EBITDA adj. CAPEX ex. M&A Payments to obtain Non-cash NWC Net cash 31.1
Slide 16: Full Year 2019
FULL YEAR 2019 Ole Johan Langenes (Acting CFO) 16
Slide 17: Group performance stronger than expected
Group performance stronger than expected Adj. net revenue1 (NOKm) Adj. EBIT1 (NOKm) +18% +26% 600 50% 1 200 38% Target: 36% 40% High-single digit revenue growth on 400 Target: 30% 800 an organic basis Stable EBIT margin 1 284 on an organic basis Revised in Q3 19 to 1 088 be somewhat higher 491 20% t
Slide 18: Adj. net revenue and adj. EBIT by segment – Full Year
Adj. net revenue and adj. EBIT by segment – Full Year Consumer segment Business segment New Growth Initiatives Adj. net revenue1 (NOKm) Adj. net revenue1 (NOKm) Adj. net revenue1 (NOKm) 1 000 +18% 1 000 1 000 Target2: 750 Mid-single digit net 750 750 revenue growth Target2: Around double digit 500 R
Slide 19: Performance vs financial targets
Performance vs financial targets1 Targets Status Group Ambition to act as a consolidator in a fragmented market One acquisition in 2019 Cap.ex. Targeted to be in the area of NOK 50m annually on an organic basis over the next three years In line with targets (50 NOKm) Moderate leverage with
Slide 20: Q&A
Q&A © Fjordkraft
Slide 21: CEO State of the Union
CEO STATE OF THE UNION Rolf Barmen (CEO) Oslo, 13th February 21
Slide 22: Today's presenters and Fjordkraft management team
Today’s presenters and Fjordkraft management team Today’s presenters Broader management Rolf Barmen Alf Kåre Hjartnes Chief Executive Officer EVP - Head of Technology and Digitalisation Ole Johan Langenes Jeanne Tjomsland Acting Chief Financial Officer EVP - Head of Group Marketing, Communications &
Slide 23: Fjordkraft at a glance
Fjordkraft at a glance – a leading Norwegian electricity retailer for both consumer and business customers Deregulated: Transmission system Distribution system Energy production operator (TSO) operators (DSO) Electricity retailers End-customers 2019 financials 4% Gross revenue New Growth Con
Slide 24: A highly successful strategy execution has resulted in profitability shift
A highly successful strategy execution has resulted in an impressive profitability shift and net revenue growth Impressive net revenue and EBIT development… …enabled through optimisation & focused investment 2002-2012 2013-2019 Net revenue adj.1 in NOKm 1 284 Today New management 1 088 Fjordkraft es
Slide 25: A highly fragmented industry – Fjordkraft ready to be the consolidator
A highly fragmented industry – Fjordkraft ready to be the consolidator We observe that We believe that The industry is very fragmented Fjordkraft is positioned to take lead in the consolidation >100 retailers ~10 with national presence Substantial financial fire power Local players (<10k) Regional
Slide 26: A complex power market handled through clear mandates and strict governance
A complex power market handled through clear mandates and strict governance – volatility supporting margin upside Several wholesale markets • the day-ahead market • the intraday market • the balancing market Five bidding areas in Norway due to grid congestions • National players get a natural divers
Slide 27: Electricity prices expected to increase slightly along with increased volatility
Electricity prices expected to increase slightly along with increased volatility Electricity prices1 in NOK øre/kWh 51 44 42 37 43 43 40 30 38 37 28 22 18 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Slide 28: Operating in the highly attractive Norwegian market
Operating in the highly attractive Norwegian market with an unparalleled demand profile, both now and for the foreseeable future Electricity consumption in continental Norway1 1 2 3 5 7 9 Non-discretionary service with stable and slightly increasing long-term demand TWh per year Electrification of t
Slide 29: Securing profitability through the three defensive lines
Securing profitability through the three «defensive lines» Securing profitability Customer Sales Product Service & «First line of activities development Loyalty defence» = programs Net revenue growth Distribution, Top of Product management Attraction, it’s all Mind, Regulatory about managing price (
Slide 30: Growth targets for 2020 are still valid
Growth targets for 2020 are still valid Roadmap for growth 2020 Number of mobile subscribers (‘000)1 2 million (+0.6 million) people supplied 125 with electricity from Fjordkraft 100 875k deliveries (+225k) through growing the customer base 66 38 Continue leverage market leading brand and Organic
Slide 31: Targeting further growth over the next years
Targeting further growth over the next years Roadmap for growth 2020-2022 Target at the end of 2022: 1075k electricity deliveries (+420k) through growing the customer base Fjordkraft one of very few with scale and capacity to consolidate M&A Market and regulatory developments supportive – increa
Slide 32: Fjordkraft – Summary investment highlights
Fjordkraft – Summary investment highlights Operating in the attractive Norwegian electricity retailing market with an unparalleled demand 1 profile and a level playing field favouring strong national brands such as Fjordkraft A proven business model providing ‘need to have’ electricity combined with
Slide 33: A clear ESG focus leading to recognition from UN Climate Change secretariat
A clear ESG focus leading to recognition from i.a. United Nations Climate Change secretariat «Plastsmart» Reducing plastic waste in oceans | Capital Markets Day | 2020 33
Slide 34: Regulatory Drivers and Consolidation
REGULATORY DRIVERS AND CONSOLIDATION Arnstein Flaskerud (EVP Head of Strategy, M&A, Innovation and Regulations) Oslo, 13th February 34
Slide 35: Substantial changes in the regulatory environment in 2019
Substantial changes in the regulatory environment in 2019 The EU Third Energy Package with change of authority and a new independent appeal body Digitalisation of the industry. Smart meters and Elhub streamlining processes between all the players Unbundling of vertically integrated companies, and se
Slide 36: Regulations
REGULATIONS © Fjordkraft
Slide 37: Electricity market - regulatory developments providing opportunities
Electricity market - regulatory developments providing significant opportunities for large independent retailers Regulatory milestones in Norway Unbundling Mandatory One Invoice and Power Tariff 2020 - 2021 2022 - 2023 • Vertically integrated companies need to split grid operations and retail operat
Slide 38: Mobile market - new regulations betters opportunities for independent providers
Mobile market - new regulations betters the opportunities for the independent service providers Regulatory milestones in Norway Gross Margin squeeze test only More balanced regulations 2017 - 2019 2020 - 2022 • Telenor is obliged to provide access and call origination to • New market regulation is n
Slide 39: Mergers & Acquisitions
MERGERS & ACQUISITIONS © Fjordkraft
Slide 40: Substantial potential for consolidation within electricity retailing in Norway
Substantial potential for consolidation within electricity retailing in Norway Typically have strong regional positions National and national presence – facing players National Typically have strong regional positions and national increased competition from larger (50- players national players prese
Slide 41: Main drivers for consolidation
Main drivers for consolidation Driver Description Regulatory changes Significant loss of competitive advantage for (regional/local) players Merging of grid companies Consolidation in other parts of the value chain is supporting a more horizontal structure and can trigger divestment of retail portfol
Slide 42: M&A approach and synergies
M&A approach and synergies Approach Cost synergies Cash Administration or Shares Invoicing, customer service and back-office Industrial approach: Sales and marketing • Co ownership • Local jobs • Regional office | Capital Markets Day | 2019 42
Slide 43: Fjordkraft is well positioned as the consolidator
Fjordkraft is well positioned as the consolidator M&A roadmap 2020 Maintaining target of +150K deliveries from 2018 (140k remaining) 1. The Fjordkraft Factory - our system and process architecture - enables significant scale and synergy effects 2. Offers scale through industrial partnership, as an a
Slide 44: Key highlights from regulations and M&A
Key highlights from regulations and M&A We expect that M&A activities will fulfill a major part of our 1 Roadmap to Growth Regulations both in the electricity market and the mobile market 2 are supporting Fjordkraft’s growth strategy The electricity market is highly fragmented and provides a 3 subst
Slide 45: Innovation strategy
Innovation strategy Arnstein Flaskerud (EVP Head of Strategy, M&A, Innovation and Regulations) Oslo, 13th February 45
Slide 46: Growth model and growth opportunities
Growth model and growth opportunities New markets 4 3 Existing services 1 Loyalty and new purchases 2 More customers related to core business 2 New customers, organic, M&A, expanded alliance New products and services 3 New products and services New from other industries customers 4 New markets, Inte
Slide 47: Building both linear business models and platform business models
Building both linear business models and platform business models • Sells products and services to end users • Facilitates transactions between the participants • Owns one side of the transaction • Owns the infrastructure that facilitates the transactions • The value creation lies in the product • C
Slide 48: Fjordkraft is applying a Fast second innovation strategy
Fjordkraft is applying a “Fast second” innovation strategy First mover Fast second Must be able to handle high uncertainty Must win the battle of dominant market related to: design • Technology development Must be able to scale fast • Brand • Customers adoption • Sales • Distribution • Operations Th
Slide 49: The green shift facilitating new business opportunities
The green shift facilitating new business opportunities Climate Digitalisation | Capital Markets Day | 2020 49
Slide 50: Ongoing and upcoming new services and businesses
Ongoing and upcoming new services and businesses Consumer Business New Growth Initiatives Joint venture software company (Metzum AS) offering standard Digital customer Full-Service software components from the front end - Solar (PPA) Fjordkraft Factory to grid overview and companies and suppliers co
Slide 51: Key highlights from Innovation Strategy
Key highlights from Innovation Strategy Our focus is to stay closest to the customer and develop 1 our core business, in parallel with looking at new growth areas Our competitive advantage will normally be that we have the most 2 cost-efficient muscles for new growth areas When it comes to technolog
Slide 52: Consumer
CONSUMER Christian Kalvenes (EVP Head of Consumer) Oslo, 13th February 52
Slide 53: The No.1 brand for electricity retailing in the Norwegian consumer market
The No.1 brand for electricity retailing in the Norwegian consumer market Consumer segment in brief A leading market position #1 The No. 1 electricity retail brand in the consumer The Consumer segment segment1 comprises energy sales and an attractive menu of value-added #1 The No. 1 top-of-mind bran
Slide 54: A broad and market leading product offering
A broad and market leading product offering Spot products Variable products Value added services Product characteristics: Product characteristics: Product characteristics: • The customer’s price follows the spot • Discretionary pricing with a notification • Differentiating and supplementary price pe
Slide 55: The battle for market shares
The battle for market shares – more than just price and local affection • Competition traditionally spearheaded by price or local affection • Customer experience has emerged as an important part of the value proposition | Capital Markets Day | 2020 55
Slide 56: Digital customer experience as a competitive advantage
Digital customer experience as a competitive advantage • The Fjordkraft app was released in Q4 2019 • The app will give the customer access to the best services that the Fjordkraft-universe has to offer • More than 100,000 downloads • Fjordkraft is perfectly positioned for making digital customer ex
Slide 57: New technology and digitalisation empowering the customer
New technology and digitalisation empowering the customer • During 2020 a wide range of services will be developed and offered through the Fjordkraft-app: • Quick and easy overview of electricity consumption, mobile data usage and customer benefits • Control of EV charging, live energy consumption s
Slide 58: Launch of digital marketplace
Launch of digital marketplace – offering complementary products related to Fjordkraft’s core business • The Fjordkraft Marketplace • The perfect place for customers to buy quality goods from quality 3rd party vendors • Fjordkraft will stay intangible, gain new revenue streams and increase customer l
Slide 59: Perfectly positioned for creating competitive advantages in the digital age
Perfectly positioned for creating competitive advantages in the digital age Strong brand Large customer base Distribution power Cost-effecient factory Fjordkraft is perfectly positioned: • Market leading value proposition • Fjordkraft’s distribution power, brand strength, customer base and factory a
Slide 60: Positive revision of financial targets for the Consumer segment
Positive revision of financial targets for the Consumer segment Adj. Net revenue growth Adj. EBIT margin Current target for 2020: Current target for 2020: Targeting mid-single digit net revenue growth on an organic Targeted to gradually go down towards a sustainable level of basis. slightly above 30
Slide 61: Mobile
MOBILE | Capital Markets Day | 2020 61
Slide 62: The No.1 service provider for mobile phone connectivity in the consumer market
The No.1 service provider for mobile phone connectivity in the consumer market Mobile in brief A leading market position Fjordkraft is a service provider in #1 The No. 1 service provider for mobile phone the mobile consumer market with connectivity in the consumer segment1 highly attractive subscrip
Slide 63: Continued focus on both growth and profitability
Continued focus on both growth and profitability Customer growth Financial targets Current target for 2020: Current target for 2020: Targeting 125k subscribers at the end of 2020 Targeting positive EBIT at the end of 2020 Maintaining target for 2020 – continued focus on growth: Maintaining target fo
Slide 64: A Consumer segment with clear competitive advantages
A Consumer segment with clear competitive advantages, ready to capitalise on digitalisation 1 The no 1 electricity retail brand in the consumer segment 2 Industry leading nationwide distribution platform and omnichannel strategy 3 Market leading value proposition addressing differentiated consumer n
Slide 65: Business
BUSINESS Roger Finnanger (EVP Head of Business) Oslo, 13th February 65
Slide 66: A brief look at the Business segment
A brief look at the Business segment Business segment in brief A leading market position Selected customers #1 A leading market position with > 78,000 deliveries and >32,000 business customers The Business segment comprises energy sales and services to small #1 A leading brand position with 94% bran
Slide 67: Competitive advantage with distribution power covering all segments
Competitive advantage with distribution power covering all segments with national presence A tailored approach to each of the segments SMEs Large Customers Public entities Size: From 0 – 10 GWh Size: From +10 GWh Size: From +5 GWh Sales capacity: Sales capacity: Sales capacity: Balanced distribution
Slide 68: A broad and market leading product offering
A broad and market leading product offering Spot products Variable products Spot w/ risk management Value added services Product characteristics: Product characteristics: Product characteristics: Product characteristics: • The customer’s price • Discretionary pricing with • Spot with risk • Differen
Slide 69: Cooperative housings
Cooperative housings 69 | Capital Markets Day | 2020 69
Slide 70: A professional and attractive partner through value added services
A professional and attractive partner through value added services | Capital Markets Day | 2020 70
Slide 71: Increased profitability and increased loyalty through value adding services
Increased profitability and increased loyalty through value adding services • Energy and climate reporting through the web service “Min Bedrift” is offering businesses increased insight about their consumption • Accompanied with professional advisory services and green product offerings, these diffe
Slide 72: Module based Energy Management System offering tailored solutions
Module based Energy Management System offering tailored solutions Energy mapping – a complete inspection of energy Energy Rating – an overall energy efficiency usage in the building assessment of a building Customers receive a report on energy consumption and suggested measures to reduce consumption
Slide 73: Expanding the product range with local sustainable energy solutions
Expanding the product range with local sustainable energy solutions Full-Service Solar (PPA) • No capital costs • Long term – predictable costs • Fixed long term price • No management needed • Get improved certification Full-Service Heat Pumps (PPA) • No capital costs v • Long term – predictable cos
Slide 74: Revised financial targets for the Business segment
Revised financial targets for the Business segment Adj. Net revenue growth Adj. EBIT margin Current target for 2020: Current target for 2020: Targeting around double digit net revenue growth on an organic Targeted to increase to above 55% on an organic basis, driven basis by scale effects Maintainin
Slide 75: A Business segment well positioned for further growth
A Business segment well positioned for further growth Strong distribution power provides rapid market penetration on new products and 1 services A high brand awareness and large customer portfolio makes Fjordkraft an 2 attractive partner for new sustainable solutions New value added services strengt
Slide 76: New financial targets
New financial targets Ole Johan Langenes (Acting CFO) Oslo, 13th February 76
Slide 77: Outlook for 2020-2022
Outlook for 2020-20221 Targeting high-single digit net revenue growth on an organic basis Group Targeting an EBIT margin of 36-38% Ambition to act as a consolidator in a fragmented market Growth Targeting mid-single digit net revenue growth on an organic basis Consumer EBIT Targeting a sus
Slide 78: Q&A
Q&A © Fjordkraft