Elmera Group Asa · OSL:ELMRA
Elmera Group Asa — Investor Day (February 2021)
60 slides from Elmera Group Asa's investor day presentation, Feb 19, 2021
Slide 1: Today's agenda
Today’s agenda Start Finish Time (min) Subject Presenter 09:00 09:25 25 1. CEO state of the union Rolf Barmen 09:25 09:50 25 2. Regulations and M&A Arnstein Flaskerud 09:50 10:00 10 Break 10:00 10:25 25 3. Consumer segment Christian Kalvenes 10:25 10:40 15 4. Business segment Roger Finnanger 10:40 1
Slide 2: CEO State of the Union
CEO STATE OF THE UNION Rolf Barmen (CEO) 19th February 2
Slide 3: 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 4: Fjordkraft at a glance – a Nordic electricity retailer
Fjordkraft at a glance – a Nordic electricity retailer with the leading position in the Norwegian market and significant growth potential in Sweden and Finland Deregulated: Transmission system Distribution system Energy production operator (TSO) operators (DSO) Electricity retailers End-cust
Slide 5: Successful strategy execution and 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 2013-2020 Net revenue adj.1 1543 in NOKm Today 1284 New management Fjordkraft esta
Slide 6: A highly fragmented Nordic market
A highly fragmented Nordic market – Fjordkraft with a proven ability and ambition to be the consolidator Norway Sweden Finland Sources: Company information | Capital Markets Day | 2021 6
Slide 7: European electricity market transitioning to greener energy mix
The European electricity market is transitioning towards a greener energy mix, with Norway as the clear renewable leader EU +200% ~0% + 10€/tonne Wind and solar production Coal power plants expected to be CO2 prices expected to increase expected to increase with +200% more or less non-existent in 20
Slide 8: A robust business model independent of electricity price level
A robust business model – long term profitability independent of electricity price level Net revenue adj. and elspot prices1,2 1 800 50 44 According to NVE’s forecast, the long term Norwegian 1 600 1 543 electricity price is expected at around NOK 40 øre/kWh over the next 20 years, but might vary si
Slide 9: A pan-Nordic and complex power market
A pan-Nordic and complex power market handled through clear mandates and strict governance Several wholesale markets • the day-ahead market • the intraday market • the balancing market Several bidding areas due to grid congestions • Larger players get a natural diversification to local price risk CO
Slide 10: Attractive Nordic market with stable demand profile
Operating in the highly attractive Nordic market with a stable demand profile and growth potential from increased electrification Electricity consumption in the Nordics (TWh)1 Non-discretionary service with stable and Norway 74 slightly increasing long-term demand 69 73 60 within households, service
Slide 11: Geographic expansion – the natural step
Geographic expansion – the natural step after becoming the largest retailer in Norway 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, Regula
Slide 12: Two strategic acquisitions completed in 2020
Two acquisitions of high strategic importance completed in 2020, supporting a diversified multi-brand strategy Norway Sweden Finland Geographical market Fjordkraft pre Acquired Acquired 2020 acquisitions September 2020 November 2020 Switch Nordic Green Brands # of deliveries ~630k ~110k ~125k ~165k
Slide 13: Targeting further growth over the next years
Targeting further growth over the next years Roadmap for growth 2021-2023 Targeting a 35% market share in Norway (~1.2m deliveries, up from ~860k), mainly through M&A Targeting a top 4 position both in the Swedish and Finnish market (~600k deliveries, up from ~165k) Fjordkraft one of very few with
Slide 14: Sustainability commitment through Klimanjaro and Klimahub
We continue our sustainability commitment through “Klimanjaro” and “Klimahub” | Capital Markets Day | 2021 14
Slide 15: Fjordkraft – Summary investment highlights
Fjordkraft – Summary investment highlights Operating in the attractive Nordic electricity retailing market with a stable demand profile and a 1 regulatory environment levelling the playing field, beneficial to pure play retailers A proven business model providing ‘need to have’ electricity combined
Slide 16: Regulatory drivers and consolidation
REGULATORY DRIVERS AND CONSOLIDATION Arnstein Flaskerud (EVP Head of Strategy and M&A) 19th February 2021 | Capital Markets Day | 2021 16
Slide 17: The green shift facilitating new business opportunities
The green shift facilitating new business opportunities Climate Digitalisation | Capital Markets Day | 2021 17
Slide 18: Building linear 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 19: Regulations
REGULATIONS | Capital Markets Day | 2021 19
Slide 20: Substantial regulatory changes in Norway in 2021
Substantial changes in the regulatory environment in Norway materialising in 2021 Unbundling of vertically integrated companies and separation of the end user business and monopoly activities Digitalisation of the industry. Smart meters and Elhub streamlining processes between all the players The EU
Slide 21: Norway regulatory developments providing opportunities for independent retailers
Norway - regulatory developments providing significant opportunities for large independent retailers Regulatory milestones in Norway Unbundling Unbundling of brand name and New Grid Fee models 2020 - 2021 2022 - 2023 • Vertically integrated companies need to split grid operations • Unbundling of bra
Slide 22: Certification of electricity retailers
Certification of electricity retailers leading to increased standardisation and a more level playing field “Trygg Strømhandel” • Certification of electricity retailers initiated by associations of energy companies in Norway • The ambition of Trygg Strømhandel is to: • Help customers navigate safely
Slide 23: Mobile market – new regulations
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 24: Mergers & Acquisitions
MERGERS & ACQUISITIONS | Capital Markets Day | 2021 24
Slide 25: M&A results in 2020 – overperforming substantially
M&A results in 2020 - overperforming substantially Completed transactions in 2020 Innlandskraft AS ~240k customers • The acquisition made Fjordkraft the largest player in the Norwegian market • Gudbrandsdal Energi will continue as a separate fighting company and brand while the Eidsiva Marked brand
Slide 26: The electricity market in Norway, Sweden and Finland
The Electricity market in Norway, Sweden and Finland Market assessments • All markets have the same structure with few large N players, some medium players, and many small players • In Norway, two players have around 50 percent of the market, while in Sweden and Finland, four to five players share a
Slide 27: 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 Incumbents are rigged for local competition –
Slide 28: Fjordkraft is well positioned as the consolidator
Fjordkraft is well positioned as the consolidator Scale and financial power Cost synergies The Fjordkraft Factory and platform, our Administration system and process architecture, enables significant scale and synergies Invoicing, customer Offers scale through industrial partnership, as service and
Slide 29: 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 EU regulations in the electricity market are supporting Fjordkraft’s 2 growth strategy, although it takes more time in Sweden and Finland The electricity market is highly fragme
Slide 30: Break
Break Continuing at 10:00 a.m. UTC+1 30
Slide 31: Consumer
CONSUMER Christian Kalvenes (EVP Head of Consumer) 19th February | Capital Markets Day | 2021 31
Slide 32: Largest player in the Norwegian consumer market
Fjordkraft is the largest player in the Norwegian consumer market, supplemented by both a strong fighting brand and a regional brand Consumer segment in brief A leading market position #1 Fjordkraft - the largest and most well-known The Consumer segment electricity retail brand in the consumer segme
Slide 33: Broad core product offering and value added services
A broad core product offering and differentiating value added services enable a market leading value proposition Spot related products Attractive offering to customers Product characteristics: Menu of electricity supply price plans matching varying consumer preferences • The customer’s price follo
Slide 34: The battle for customers
The battle for customers Local affiliation Smart home and digital customer experience Price | Capital Markets Day | 2021 34
Slide 35: Our digital ecosystem offers unique customer experience
Our digital ecosystem offers unique customer experience The Marketplace My page EV charging app The Fjordkraft app fjordkraft.no | Capital Markets Day | 2021 35
Slide 36: New digital services embraced by customers
New digital services embraced by customers • The Fjordkraft app has been embraced by our customers • About 180k unique users in 2020 • More than 30 app updates in 2020, launching new services to Fjordkraft customers every few weeks • Users have a significantly lower churn rate and higher customer sa
Slide 37: Digital services empowering customers
Digital services empowering customers • More attractive services will be launched in the app during 2021 • Real time overview of the electricity consumption with Fjordkraft Pulse • More EV brands ready for smart charging • Improved smart home functionality and support | Capital Markets Day | 2021 37
Slide 38: Digital marketplace launched 18 January 2021
Digital marketplace launched on the 18th of January 2021 • The Fjordkraft Marketplace • Attractive products from quality vendors • Generates new revenue streams and increases customer loyalty • A wide range of products compatible with the Fjordkraft app | Capital Markets Day | 2021 38
Slide 39: Perfectly positioned for great customer experiences
Perfectly positioned for creating great customer experiences and extensive customer value Digital ecosystem Mobile Award-winning customer service Loyalty program Attractive product offering Attractive product offering with differentiating value added services and loyalty program, award-winning custo
Slide 40: No.1 service provider for mobile phone connectivity
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 41: Consumer segment with clear competitive advantages
A Consumer segment with clear competitive advantages, ready to capitalise on digitalisation The largest player in the Norwegian consumer market, supplemented by both a 1 strong fighting brand and a regional brand A broad product range with value-added services and an industry leading 2 loyalty progr
Slide 42: Business
BUSINESS Roger Finnanger (EVP Head of Business) 19th February | Capital Markets Day | 2021 42
Slide 43: 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 > 105k deliveries and >45k business customers The Business segment comprises energy sales and services to small #1 A leading brand position with 97 % brand aw
Slide 44: Competitive advantage with distribution power
Competitive advantage with distribution power covering all segments with national presence A tailored approach to each of the segments Sales force with operational focus Large Customers covering the entire SOHO SMEs & Public entities country Size: From 0 – 0.2 GWh Size: From 0.2 - 5 GWh Size: > 5 GW
Slide 45: Offering the industry's most attractive product range
Offering the industry's most attractive product range No.1 in customer satisfaction vs peers 69,4 Wide product range addressing varying risk profiles 68,7 68,6 Energy as a service, Energy management and Business advisory services 67,4 65,9 Web-based reporting (‘Min Bedrift’) supporting energy
Slide 46: Taking action on climate change
Taking action on Climate change • Web based solution supporting • Sustainability initiative to demand climate implementation of climate accounting, neutrality towards suppliers and partners climate initiatives and climate neutrality • Momentum for Change “Lighthouse • Making Climate Footprint transp
Slide 47: Solar panel and heat pump solutions, energy as a service
• Reducing emissions by offering solar panel and heat pump solutions • Power purchase agreement - “Energy as a service” • Long term agreements, 7-25 years • Gives the customer low risk and predictable power costs • Business model with low risk for Fjordkraft and our partners • No need for investment
Slide 48: Offering EV charging to co-owners and business
• Offering EV charging to Co- • Reports on all energy sources owners and business • Complete overview • No administration needed • Control over tenants’ • Easy cost allocation between consumption users • Distributing all energy costs • Billing service • Billing services will be launched in 2021 | Ca
Slide 49: Becoming a pan-Nordic retailer attracts Nordic business customers
Becoming a pan-Nordic retailer increases attractivity among Nordic Business customers • We signed our first cross-border customers in 2020 • We will be offering cross-border deliveries in Finland in 2021 • We will seek to establish deliveries in Denmark during 2021 | Capital Markets Day | 2021 49
Slide 50: A Business segment well positioned for further growth
A Business segment well positioned for further growth Strong distribution power and a market leading product offering, providing rapid 1 market penetration on new products and services A high brand awareness and large customer portfolio makes Fjordkraft an 2 attractive partner for new sustainable so
Slide 51: Nordic expansion
Nordic expansion Per Heiberg-Andersen (EVP Nordic) February 19th, 2021 | Capital Markets Day | 2021 51
Slide 52: Pan-Nordic expansion with acquisition of Nordic Green Energy
Fjordkraft starting pan-Nordic expansion with the acquisition of Swedish-Finnish retailer Nordic Green Energy The company Nordic Green Energy (Switch Nordic Green AB) • ~165k customers in Sweden and Finland combined – was acquired by Fjordkraft primarily consumer and SME focused in 2020 and is a Swe
Slide 53: Many similarities in the Nordics, but also differences
Many similarities in the Nordics, but also differences Similarities Differences EU regulations A more diversified energy mix in SE and FI Common power exchanges - Nord Pool and Nasdaq Historical power market price levels Pan-Nordic power trading wholesale services Product mix (fixed price is most co
Slide 54: The regulatory landscape
The regulatory landscape Potential through changes in regulation enabling more equal conditions Regulatory development Sweden Regulatory development Finland • Hub postponed – no set date or expectation • Hub expected February 2022. Customer centric model • Revision of current market processes. In th
Slide 55: Goal to be among top four players in Sweden and Finland
Our goal is to be among the top four players in both the Swedish and the Finnish markets • The markets are not consolidated – our goal is to build a top four position in both markets respectively by the end of 2023 • Established a focused M&A team that also includes industry expert and local compete
Slide 56: Our strategic approach
Our strategic approach Further M&A growth, primarily targeting 01 regional publicly owned energy companies where electricity retailing is not considered core business Replicate platform and efficient operations 02 based on Fjordkraft’s model, adjusted to fit SE and FI market and regulations Leverage
Slide 57: Key highlights from Nordic expansion
Key highlights from Nordic expansion 1 A good start through acquisition of Nordic Green Energy 2 SE and FI are attractive markets with significant M&A potential 3 Replicate Fjordkraft’s platform and support product development 4 Become a top four player in both SE and FI by the end of 2023 | Capital
Slide 58: Financial outlook
Financial outlook Ole Johan Langenes (Acting CFO) February 19th, 2021 | Capital Markets Day | 2021 58
Slide 59: Outlook for 2021-2023
Outlook for 2021-20231 Targeting high-single digit net revenue growth. 2021 expected above double digit due to acquisitions in 2020 Group 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 revenu
Slide 60: Q&A
Q&A C) Fjordkraft Mer for pengene
Elmera Group ASA (Fjordkraft) — Investor Day (February 2021) on 6ix