Hello, everyone, and welcome to Fjordkraft's Third Quarter 2020 Results Presentation. My name is Morten Opdal, head of controlling and investor relations at Fjordkraft, and I'll have the pleasure of guiding you through today's presentation. Once again, this is a digital event due to the current pandemic. We will be doing our presentation and then we will end it with a Q&A session and you have the opportunity to submit your questions through the webcast player. We encourage you to do this during the presentation and as there is some time lag on the presentation. We are starting off with Mr. Rolf Barmen.
Thank you, Morten. Good morning, everyone. It's time for our quarterly presentation once again, also this time a digital event only. We hope that the society will be going back to normal soon, but in the meantime, we do what we can do to limit the spreading of the coronavirus and keep our business as usual. We will start off at page three on the presentation on the highlights for the third quarter. For Fjordkraft, the third quarter has been a quarter with strong growth, both financially and when it comes to number of customers. Net revenue is up 10% year-on-year and EBIT adjusted is at 25% year-on-year. We have seen an organic growth of almost 6,000 electricity deliveries within consumer and business segments, in addition to almost 5,000 new mobile subscribers in the period.
The deliveries from the Innlandskraft transaction are included as of the 30th of September. This makes the total growth in deliveries more than 240,000 in the quarter, and volume is up 4% year-on-year, and this is all organically. That is exclusive Innlandskraft. According to Kantar's third quarter survey, Fjordkraft is still number one when it comes to top of mind and brand awareness in the industry. We are in line with the industry average on customer satisfaction, but well above peers like Fortum, NorgesEnergi, and Hafslund. I'm also very pleased by the fact that we acquired Switch Nordic Green in October. Switch Nordic Green is a Nordic retailer with operations in both Sweden and Finland. On the following slide, I will emphasize a few key highlights from the transaction. Please go to the next slide, page five.
As mentioned, SNG, with its commercial brand, Nordic Green Energy, is a Nordic electricity retailer with operations in both Sweden and Finland and 167,000 electricity deliveries, of which 100,000 in Finland and 67,000 in Sweden. They are present in both the consumer and business segment and have an estimated market share of 2.8 in Finland and 1.2 in Sweden, representing an annual consumption of around 3.3 terawatt hour. The acquisition positions Fjordkraft for further growth in the Nordics as the markets become more similar and competition becomes increasingly pan-Nordic and we see increased attractivity in the pan-Nordic business segment, a potential for increased sale of value-added services following this transaction.
The purchase price is based on an enterprise value of NOK 375 million on a cash and debt-free basis. In addition to the enterprise value of NOK 375 million, there are tax losses carried forward in the target and its subsidiary.
The exact value of these are to be decided through SNG's tax assessment for the fiscal year 2020. We expect underlying EBIT to be around 50 million SEK per year. Closing took place on November the 10th, and this is also when SNG will be included in the group's financial figures. Please go to next slide, page six. A few comments on the Innlandskraft acquisition. Implementation is developing as planned, was completed on the 22nd of September, and we have made the necessary organizational changes to support the synergy realization. Severance packages have been offered to all employees affected by the reorganization, a total cost of 13 million NOK, which will be accrued in the fourth quarter as a one-off cost. The Eidsiva customers will be converted to the Fjordkraft brand during the first half of 2021, while Gudbrandsdal Energi will continue to exist as a separate fighting brand.
The transaction cost amounted to NOK 10.5 million and implementation costs are estimated to approximately NOK 11 million. Synergy realization is starting in first quarter 2021, and are expected to have full effect from the fourth quarter 2021. We are also confirming that we are well on track towards the previously communicated NOK 30 million in cost synergies. This also applies for the COGS and net working capital synergies, which will be realized when Eidsiva and Gudbrandsdal Energi are included in Fjordkraft's power purchase through Statkraft sales. Next slide, please go to page seven. I would also like to give an update on COVID-19 and the Consumer Council litigations. As many of you are aware, Norway has been struck with a second wave of COVID-19, which has resulted in new protective measures from the government.
As a response to this, we have stopped our door-to-door and stand sales activities in order to limit spreading of COVID-19. We also expect activity by electricity retailers to be somewhat lower than normal this fall, and Christmas shopping will probably be affected. These issues are expected to have a short-term negative impact on our organic growth figures. We monitor our accounts receivable closely. However, the protective measures are expected to increase credit risk. Reduced activity might also have a short-term negative impact on the business segment. As for our telecom activity, we expect voice traffic to remain on a higher level than normal, affecting the profitability of the segment. The health and safety of our employees and customers are of the utmost importance, so we make sure that employees in high-risk areas are working from home.
Sales activity is, as mentioned, reduced, and we make sure operations resume as close to normal as possible, even while working from home. The Consumer Council allegations toward 29 electricity retailers, including Fjordkraft, regarding contracts that add purchasing costs to the Elspot price have been getting attention from the media. We made a statement on the 27th of October. This statement is still valid. We disagree with the criticism from the Consumer Council on the matter. Our customer information is in line with industry standards and current rules and regulations. That being said, we are in dialogue with the Consumer Authority, and we will fully cooperate with them on the matter. We welcome increased transparency and have been working on creating an improved industry standard on sales and marketing of electricity together with Energy Norway since long before these allegations were made.
We also emphasize that the allegations from the Consumer Council and possible actions from the Consumer Authority will have a minimal impact on the group's profitability and further growth. Next slide. Please go to page eight. Let's move on to the recent market development. Elspot prices have been volatile in the quarter. In July, prices continued at a historically low level, but that increased through August and reached a spike in early September before they fell again. The temperature was colder than last year in the first two months in the quarter, but September, which usually represents the month with the highest consumption in the quarter, was warmer than last year. Next slide. Please go to page nine. Number of electricity deliveries in the consumer segment increased by 217,000 deliveries in the quarter, of which 5,225 was organically.
At the end of the third quarter, the segment comprised 761,000 deliveries, which represents a growth of 290,000 deliveries year-on-year. The volume sold in Q3 2020 was 1.288 gigawatt hours, which is an increase of 5% from the third quarter without Innlandskraft. The increase is driven by both increase in number of deliveries and increased average consumption per delivery. The Fjordkraft app has been welcomed by our customers and recently reached 150,000 registered users. We continuously work on improving functionality, and we will be launching EV charging functionality and real-time consumption features very shortly. Please go to next slide, page number 10. The business segment comprised 104,000 electricity deliveries at the end of the third quarter, which represents an increase of 23,000 deliveries in the quarter, of which 634 organically. The volume sold in the Q3 2020 was 1.104 gigawatt hours, an increase of 3% compared to Q3.
Also this, of course, without Innlandskraft. The increase is driven by growth in number of deliveries. Next slide, please. In the NGI segment, the number of mobile subscribers was 122,000 at the end of the third quarter, which represents an organic growth of 4,691 subscribers from the second quarter. Alliance volume in the third quarter was 689 gigawatt hours, which is up 2% year on year. I'm very happy to say that we have a strong pipeline of both ordinary and standard alliance partners to be implemented in the fourth quarter. Moving on to the financial review, I will leave the floor to Ole Johan Lagnæs.
Thank you, Rolf. Good morning, everyone. I'm once again delighted to present the financials for you today, giving the strong results we discussed this morning. I will start off at page 13 with the net revenue. As Rolf said, the third quarter turned out to be another strong quarter with an adjusted net revenue of NOK 284 million on Group level. This is up 10% from third quarter of 2019. The growth is driven two-thirds by margin improvement and one-third by volume growth. The Elspot prices were low in the first half of the quarter, followed by both a price increase and then decrease in September. Looking at the last 12 months, adjusted net revenue on the right-hand side, we see a new all-time high of NOK 1.45 billion. This represents an increase of 19% driven by margin improvement. Next slide, page 14.
Moving on to the EBIT adjusted slide, we see an EBIT improvement of NOK 16 million from third quarter of 2019. This brings us up to NOK 79 million, which represents an improvement of 25%. As you can see in the chart at the left-hand side, the consumer segment is the main driver for the increase. The EBIT growth represents an increase in adjusted EBIT margin of four percentage points from 24% in the third quarter of 2019 to 28% in the third quarter of 2020. Decreased OpEx is driven by sales and marketing costs and administrative costs. Looking at the last 12 months, on the right-hand side, we see that the adjusted EBIT on group level is up NOK 138 million, from NOK 450 million in third quarter of 2019 to NOK 588 million in third quarter of 2020.
This represents an increase of 31%, which takes the LTM adjusted EBIT margin up to 41% on group level. Up four percentage points year-over-year and one percentage point from last quarter. Next slide, page 15. In this slide, we break the numbers down to reporting segments. Starting off on the left-hand side with the consumer segment, we see that the adjusted net revenue is increasing 14% year-over-year to a nominal level of NOK 205 million. The net revenue improvement is driven by a 70/30 split from margin improvement and volume growth. The nominal EBIT adjusted level of NOK 57 million is an increase of NOK 19 million year-over-year. This gives an adjusted EBIT margin of 28%, which represents an increase of seven percentage points year-over-year, driven by net revenue growth.
Moving on to the business segment in the middle, we have a nominal adjusted net revenue of NOK 72 million. This represents an increase of 3%, which is driven by volume growth. The nominal EBIT adjusted level is NOK 34 million, which gives an adjusted EBIT margin of 47%. This is stable compared with the third quarter of 2019. Continuing to the new growth initiatives on the right-hand side, we see an 18% decrease in adjusted net revenue year-over-year, bringing us down to a nominal level of NOK 7.5 million in the third quarter of 2020. The nominal EBIT adjusted decreased by NOK 3 million. The decrease is primarily from reduced margins within mobile in connection with COVID-19, which have increased the voice activity. In addition, increased prices from Telenor is driving the cost of goods sold in the mobile market.
As stated earlier by Rolf, we had a solid growth in mobile segment, and we had around 122,000 subscribers at the end of third quarter of 2020. Next slide, page 16. A quick look at the net working capital slide tells us that the net working capital is decreasing by NOK 114 million from last quarter to a nominal level of negative NOK 173 million. There are some variations in invoicing pattern and payables that affects the net working capital, but continuous improvements and focus on invoicing process is also affecting the positive development. Compared with last year, the net working capital is down at NOK 109 million. Page 17. Quick look at the cash generation tells us that the cash generation is still strong, and the cash EBIT adjusted, as you see inside the frame, is NOK 71 million in third quarter.
Around 50% of the acquisition of Innlandskraft in third quarter was financed through cash. In total, this brings us to a net cash position of NOK 266 million at the end of third quarter of 2020. Page 18. On the back of the strong results in third quarter, we make a positive revision of our organic outlook. At group level, we increased our guidance and expect a slightly higher EBIT margin than the targeted 36%-38% in 2020. Apart from this, we keep our revisions as stated in the second quarter presentation. On to page 19, my last page for today. When it comes to the effects from the Innlandskraft acquisition, we expect Innlandskraft contribution to the group EBITs adjusted in fourth quarter to be in the area of NOK 25 million-30 million.
We also show the depreciation profile of the acquisition in this slide with the highest depreciation in 2021, followed by gradually decreasing depreciations the following years. In the Capital Markets Day in February 2021, we will publish our new outlook for 2021 to 2023, including both Innlandskraft and our newest acquisition of Switch Nordic Green. That's all from me for now, and Morten will facilitate the Q&A session.
Thank you, Ole Johan. We have received a couple of questions, so we will go through them, and we encourage you to submit them also as we are answering these questions. The first one is related to the SNG acquisition, and it's like this, What are the current largest differences in Sweden, Finland versus Norway? Are the net revenue margins like what we see in Norway? How fragmented are these markets? Yeah, go ahead.
Yes, thank you for the question. It's an interesting question. It is differences also between Finland and Sweden. Of course, the consumption in Sweden is lower per electricity deliveries than in Norway. We also see that the margins are somewhat lower in Sweden, but we are very familiar with how to expand these margins. Going to Finland, the margins are fairly much the same as here in Norway. It is a fragmented industry, both in Sweden and Finland, with a lot of smaller players, as it is in Norway. We look upon both these two markets as where we in Norway were a couple of years ago, actually. There will be good opportunities for us to also consolidate in both those markets, I would say. Yes, there are differences from the Norwegian market, but there is also differences between the Finnish market and the Swedish market.
Okay. We have another one, which is on the consumer segment. Have you seen an effect on churn following the allegations made by the Consumer Council?
No. We monitor, of course, this very closely. We also monitor how many of the calls and chats that origins from these allegations, and there is next to nothing, actually, compared to the high amount of calls and chats we get. In our view, it's a very small number both when it comes to calls that happens to occur from this situation, and we cannot see anything at our churn numbers for now.
We have another question, which is on the OpEx, which shows a lower growth than what it has done the last couple of quarters. If we can give some added comments on that.
Yes. As the OpEx, I would say it's mainly a seasonal effect in third quarter of 2020. We also have, due to COVID-19, we have lower costs with sick pay and payroll taxes. I would also say, of course, due to COVID-19, we have lower travel expenses. That would be the main reason.
Good. Another question here. We have a 27% market share in Norway, and the question is, how big are you allowed to be?
We think that we can grow a bit more. We have said before that we think that we are allowed to go to 35%. We have said that we have a target or a goal in the area of 30%-35%. We have still plenty of headroom to grow through M&A here in Norway.
Good. Another one on the M&A or growth opportunities in Sweden and Finland. Should we expect more M&A in Sweden, Finland, or will you grow mainly organically?
I think that we will grow both organically and through M&A. The answer will be both.
The last question is on Innlandskraft and the synergies. You say that realization will start in Q1 2021 with full effect in Q4. Should we expect the NOK 40 million to be evenly distributed between the four quarters in 2021? I can take that one. The synergy realization will be happening gradually as we do the organizational changes and implement the customers into the Fjordkraft system and factory. In 2021, there will be a gradual inclusion of them. Fairly evenly distributed would probably be a fair assumption of that. Okay. That was the questions we received, and we'd like to thank you for your attention and wish you all a nice day.
Bye.