Pareto Aksje Norge I

Report date: 31 August 2021 Fund: Pareto Aksje Norge Category: equity fund Unit class I Inception date: 6 September 2001 Legal structure: UCITS NAV as at 31 Aug 2021: 10 725.48 Minimum investment: NOK 100 000 000 AUM: NOK 6.4 billion Domicile: Norway NAV currency: NOK ISIN: NO0010110968 Benchmark: Oslo Børs Mutual Fund Index Dealing days: all Norwegian business days Launch date: 6 September 2001 Bloomberg ticker: POAKTIV NO

Norwegian equity fund focused on sectors where Investment criteria: Norwegian companies have global competitive . Sound balance sheets advantages . Strong historical returns on equity . Reasonable pricing

Top ten holdings and sector allocation

Lerøy Seafood Group ASA 8.8% Financials 24% Yara International ASA 8.2% SpareBank 1 SMN 5.6% Materials 22% Wilh. Wilhelmsen Holding ASA 5.4% Consumer staples 19% SpareBank 1 SR-Bank ASA 5.0% Industrials 16% Borregaard ASA 4.7% Energy 13% SpareBank 1 Nord-Norge 4.7% Elkem ASA 4.5% Consumer discretionary 5% SalMar ASA 4.5% Cash 0% Kid ASA 4.4%

Key figures since inception* Risk figures since inception* Performance by periods

Fund Index Fund Index Fund Index Accumulated returns973 % 547 % Standard deviation (annualised) 19.3% 21.0%Last month 0.6% 0.3% Annualised returns12.6 % 9.8 % Tracking error (annualised) 8.9% n.a.Year to date 19.8% 16.9% Information ratio 0.3 n.a.Last 12 months 38.6% 33.9% Sharpe ratio (SOL1X)** 0.5 0.35Three years (annualised) 8.1% 9.8% Beta 0.8 n.a.Five years (annualised) 15.2% 13.4% Ten years (annualised) 10.3% 12.1% **ST1X was used until 29.01.21 Since inception* (annualised) 12.6% 9.8% Performance history* 1100 % 1000 % 900 % 800 % 700 % 600 % 500 % 400 % 300 % 200 % 100 % 0 % -100 % 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Pareto Aksje Norge I Oslo Børs Mutual Fund Index

Annual returns*

74.5% 54.4% 44.8% 46.7% 36.6% 29.0% 28.4% 18.0% 16.1% 15.0% 15.3% 19.8% 7.7% 4.0% 3.1% 2.3% 2.9%

-10.7% -7.0% -22.8%

-51.1%

2001* 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Pareto Aksje Norge I Oslo Børs Mutual Fund Index

*From launch of the share class. All figures are based on internationally recognised standards for publishing performance data. Historical returns are no guarantee for future returns. Future returns will depend, inter alia, on, market developments, the portfolio manager’s skill, the fund’s risk profile, as well as fees for subscription, management and redemption. Returns may become negative as a result of negative price developments. The performance data do not take account of the fees incurred on subscription and redemption of units/shares. Pareto Asset Management seeks to the best of its ability to ensure that all information given in this report is correct, however, makes reservations regarding possible errors and omissions. Statements in the report may reflect the portfolio managers’ viewpoint at a given time, and this viewpoint may be changed without notice. The distribution of this information may be restricted by law in certain jurisdictions and this information is not intended for distribution to any person or entity in such jurisdiction. The report should not be perceived as an offer or recommendation to buy or sell financial instruments. This is an advertising document. Pareto Asset Management does not assume responsibility for direct or indirect loss or expenses incurred through use or understanding of the report.

Fund prospectus, KIID, annual and semi-annual reports are available at paretoam.com/en/fund-documents. Other information is available at paretoam.com/en/important-documents. Monthly commentary – August 2021 By Eirik Osberg Andresen

The portfolio continues its positive trend, gaining around one per cent in August. All our holdings have now reported for the second quarter, and the upturn can largely be attributed to their solid performance. When reviewing the quarter, we see that just under 80 per cent of the portfolio delivered as expected or better, of which more than 50 percentage points were better. Covid-19 hit our holding companies in different ways last year, where energy was punished particularly hard and the consumer sector got away somewhat cheaper. Regardless of what effect the pandemic has had, it is very gratifying to see a broad-based improvement in the first half of this year. Our financial companies have consistently delivered solidly throughout the first half of the year. Storebrand and Sparebank 1 SMN stand out, while DNB reports slightly weaker earnings. Nevertheless, the share has strengthened significantly, and we have thus used the opportunity to sell DNB shares. In our savings banks, we have the pleasure of observing both solid lending growth and losses at almost normal levels. The companies’ underlying earnings have improved, which, together with reduced losses, leads to a solid increase in after tax profits. Dividend capacity is thus high, and we will see attractive payments when the imposed dividend restriction is terminated.

The consumer sector continues to deliver good figures. Kid impresses us especially with a top line growth of seven per cent. Together with a healthy operating focus, this has given us an increase in the EBITDA margin of more than two percentage points. The synergy effects of Kid and Hemtex are significant and will continue contributing to solid margins in the future. Austevoll Seafood also shows a solid improvement from the first half of last year with an increase in operating profit before depreciation and write-downs of as much as 16 per cent. It is clear that the strong performance of the pelagic business has not been priced in, and we see a significant upside in the share. The energy companies had a tough first half of last year, with all delivering negative adjusted free cash flow. This half year, things have turned around, and Equinor in particular has had a big improvement. The oil price naturally helps a lot, but costs and investments have also been reduced. This results in an underlying free cash flow of over eight billion dollars, which annualised accounts for over 20 per cent of the market value. Bonheur also delivered strong Q2 figures, with an operating profit before depreciation and write-downs well above market expectations. The share has risen by around 30 per cent since the presentation. Our industrial companies have started the year well and can point to a top line growth of over seven per cent. Operating profit before depreciation and amortisation is up by as much as 28 per cent. Much of this growth can be attributed to our raw material companies, as we discussed in the previous report, but Veidekke is also very impressive. After the sale of the real estate business, they have become a pure construction company, and their announced operating focus can be read directly from the second quarter report. The underlying free cash flow has more than tripled, aided by both margin expansion and reduced investment.

In order to be able to see the portfolio as a whole, we weight the figures according to our ownership interest in the companies. Overall, we see a top line growth measured in kroner of as much as seven per cent and an increase in operating profit before depreciation and amortisation of 37 per cent. The profit before tax is somewhat misleading, as the energy sector took large write-downs last year, but this is consequently also sharply up. Furthermore, underlying free cash flow has more than quadrupled, and our companies thus have a significant dividend capacity. The portfolio is attractively priced at around 12 times this year’s earnings and around 11 times next year’s expected earnings. This indicates a current earnings yield of 8 and 9 per cent, respectively.

Portfolio management team: Einar Løvoll, Besim Zekiri and Eirik Osberg Andresen (analyst)

Pareto Asset Management AS Dronning Mauds gate 3 t: +47 22 87 87 00 www.paretoam.com A company in the Pareto group P.O. Box 1810 Vika f: +47 22 01 58 50 Org. no.: 977 287 677 N-0123 OSLO, Norway e: [email protected]