ARENDALS FOSSEKOMPANI ASA ERATIONS
FORGENERATIO
ONS Q12024
Q1 Interim Report
2024
2 | ARENDALS FOSSEKOMPANI Q1 INTERIM REPORT | 2024 | 3 |
RATIONS
FORGENERATIONS
GENERATIONS
For generations, Arendals Fossekompani has provided people and communities with clean energy and inspiration. Established in 1896 to harness the energy from an everlasting resource, water - we have utilized the benefits of this resource to build and develop high-tech companies. What started as a local producer of hydropower, has transformed into a global industrial investor.
While running water continues to power our business, we search for, invest in, and support companies that have the potential to make a difference. To enable the transition to a more sustainable future, we offer human and financial resources to renew and advance industries. Our competence is particularly strong
in areas such as energy transition, electrification, materials, digitalization, and big data analytics.
We are a proud builder and supporter of technology that impacts the world. This is our legacy, our history, our future. It is what we have done, and what we will continue to do.
For generations.
4 | ARENDALS FOSSEKOMPANI Q1 INTERIM REPORT |
Highlights
Q1 2024
2024 | HIGHLIGHTS Q1 2024 | 5 |
AFK Group revenue growth of 2%
Group revenue for Arendals Fossekompani in the first quarter amounted to NOK 1,435 million, slightly up from 1,405 milllion
Lower electricity prices
Electricity prices were substantially lower in the first quarter, compared to the same quarter in 2023. As a result, AFK Vannkraft revenue was down 36% in the first quarter.
Good underlying performance across several portfolio companies
in the same quarter in 2023. Operating margin in the quarter was 8%.
NOK 1.00
Dividend to be paid in May
Arendals Fossekompani will pay a quarterly dividend for the first quarter of NOK 1.00 per share.
Significant Satellite Communication Order
NSSLGlobal won a significant governmental Satellite Communication contract during the quarter, stretching over 5 years with an option for 2 additional years.
Succesful Plasma Sonic delivery & key Microelectronics milestone
Tekna delivered the most advanced PlasmaSonic Wind Tunnel ever built to a leading aerospace OEM. The MLCC business line received its first revenue-generating order from a leading producer of MLCC devices.
Strong operating revenue
ENRX operating revenue was EUR 46.2 million, a 10% increase from the same quarter in 2023.
Solid growth and margin improvement
Volue's revenue increased by
18% (10% organic) in Q1 2024 compared to Q1 2023. SaaS revenues increased by 42%, representing 31% of total revenue. Adjusted EBITDA margin was 21% in the quarter, up from 16% in Q1 2023.
6 | ARENDALS FOSSEKOMPANI Q1 INTERIM REPORT |
Financial
Highlights
Q1 2024
FINANCIAL KPIs (MNOK) | Q1 2024 | Q4 2023 | Q1 2023 | |
Arendals | Revenue and other income | 1,435 | 1,407 | 1,405 |
Fossekompani | Operating profit | 111 | 24 | 202 |
consolidated | ||||
Margin | 8% | 2% | 14% | |
Operating profit | Volue | 29 | -17 | 24 |
by company | NSSLGlobal | 57 | 48 | 54 |
Alytic | -26 | -24 | -19 | |
Tekna | -24 | -45 | -17 | |
ENRX | 46 | 38 | 37 | |
AFK Parent | 74 | 62 | 144 | |
(Vannkraft & Management) | ||||
Ampwell | -39 | -34 | -16 | |
Vergia | -2 | -3 | -2 | |
AFK Property | -4 | -2 | -2 | |
Operating profit | 111 | 24 | 202 | |
Profit before income tax | 110 | -19 | 238 | |
Profit (-loss) for the period | 8 | -87 | 71 | |
2024 | FINANCIAL HIGHLIGHTS Q1 2024 | 7 |
REVENUE AND OTHER INCOME (MNOK)
2022 | 2023 | 2024 |
1,405 | 1,435 | 1,404 | 1,114 | 1,224 | 1,360 | 1,407 |
1,052 | 1,062 | |||||
Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 |
OPERATING PROFIT (MNOK)
2022 | 2023 | 2024 | ||
202 | ||||
149 | 111 | 148 | 127 | |
83 | ||||
70 | 60 | |||
24 | ||||
Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 |
PROFIT (-LOSS) FOR THE PERIOD (MNOK)
2022 | 2023 | 2024 |
71 | 41 | ||||
36 | 8 | 23 | 31 | ||
-54 | -87 | ||||
-123 | |||||
Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 |
8 | ARENDALS FOSSEKOMPANI Q1 INTERIM REPORT | 2024 | ARENDALS FOSSEKOMPANI AROUND THE WORLD | 9 |
Arendals
Fossekompani
Around the World
NUMBER OF EMPLOYEES BY COUNTRY
Norway | 790 | USA | 94 | Brazil | 12 |
Germany | 339 | France | 76 | Malaysia | 8 |
India | 251 | Denmark | 60 | Japan | 8 |
China | 196 | Finland | 65 | Italy | 6 |
Canada | 186 | Sweden | 52 | Netherlands | 7 |
United Kingdom | 186 | Spain | 28 | Singapore | 6 |
Poland | 156 | Switzerland | 22 | Israel | 5 |
Romania | 103 | Thailand | 13 | South Korea | 1 |
Total | 2,670 |
Dots on map reflect approximate locations.
Arendals Fossekompani Parent Company
(AFK Group Management and AFK Vannkraft), AFK Property
Employees | Head office |
43 | Arendal, Norway |
Countries | |
Norway |
Volue
Employees | Head office |
825 | Oslo, Norway |
Countries
Norway, Germany, Poland, Denmark,
Sweden, Switzerland, Finland, Japan, Spain
NSSLGlobal
Employees | Head office |
249 | London, UK |
Countries
United Kingdom, Germany, Norway, Denmark,
Singapore, Israel, Netherlands, Poland, USA, Sweden
Alytic
Employees | Head office |
123 | Arendal, Norway |
Countries | |
Norway, Germany, Netherlands |
Tekna
Employees | Head office |
222 | Sherbrooke, Canada |
Countries | |
Canada, France, China, South Korea |
ENRX
Employees | Head office |
1,103 | Skien, Norway |
Countries
India, China, Norway, Germany, USA, Romania, France, United Kingdom, Poland, Brazil, Thailand, Malaysia, Italy, Japan, Sweden, Spain
Ampwell
Employees | Head office |
102 | Arendal, Norway |
Countries | |
Norway, Germany, Spain |
Vergia
Employees | Head office |
3 | Arendal, Norway |
Countries | |
Norway |
10 | ARENDALS FOSSEKOMPANI Q1 INTERIM REPORT |
Arendals
Fossekompani
Group
FINANCIAL FIGURES (MNOK) | Q1 2024 | Q1 2023 | Q4 2023 | FY 2023 |
Revenue and other income | 1,435 | 1,405 | 1,407 | 5,441 |
Operating profit | 111 | 202 | 24 | 433 |
Operating margin | 8% | 14% | 2% | 8% |
Earnings before tax (EBT) | 110 | 238 | -19 | 391 |
Earnings after tax (EAT) | 8 | 71 | -87 | -30 |
Operating cash flow | 295 | 155 | -226 | -398 |
NIBD | 1,063 | -726 | 1,018 | 1,123 |
Equity | 3,668 | 3,824 | 3,638 | 3,638 |
Equity ratio | 38% | 46% | 40% | 40% |
Currency rates (NOK/CAD)
Average Q1 2024: 7.80. Average Q1 2023: 7.57. End Q1 2024: 7.94 End Q1 2023: 7.73.
Currency rates (NOK/GBP)
Average Q1 2024: 13.33. Average Q1 2023: 12.44. End Q1 2024: 13.62. End Q1 2023: 12.96.
Currency rates (NOK/EUR)
Average Q1 2024: 11.42. Average Q1 2023: 10.98. End Q1 2024: 11.68. End Q1 2023: 11.40.
2024
Arendals Fossekompani has proud traditions in power production and owns and operates two hydro- power plants. In addition, Arendals Fossekompani operates globally in many technology industries including 3D printing, algo trading, satellite services, software, digitalisation, battery and induction.
Head office
Arendal, Norway
Chair
Trond Westlie
Chief Executive Officer Benjamin Golding
Employees 2,670
Countries 24
DEVELOPMENT
LAST 5 QUARTERS
Revenue (MNOK) and operating margin
1,405 | 1,404 | 1,407 | 1,435 |
1,224 |
Q1 | Q2 | Q3 | Q4 | Q1 |
23 | 23 | 23 | 23 | 24 |
14% | 11% | 15% | 2% | 8% |
ARENDALS FOSSEKOMPANI GROUP | 11 |
Arendals Fossekompani is an industrial investment company holding nine core investments and a portfolio of financial investments. These operations employ approximately 2,700 people in 24 countries.
HIGHLIGHTS OF Q1 2024
(Figures in parentheses refer to the same period the previous year)
Total revenue for the Group amounted to NOK 1,435 million (1,405 million) in the first quarter. Consolidated earnings before tax came in at NOK 110 million (238 million). Ordinary profit after tax, but before non-controlling interests, totaled NOK 8 million (71 million).
Total revenue increased by 2% compared to the same quarter the previous year. The increase was largely driven by strong results from portfolio companies Volue and ENRX, largely offset by lower electricity prices impacting revenue generation in AFK Vannkraft and low sales in Ampwell. The reduced operating profit compared to the first quarter last year, was mainly driven by lower electricity prices leading to lower revenues and profits from hydropower production, as well as higher operating loss in Ampwell.
Income tax expense for the Group in the quarter was NOK 102 million (167 million). The tax expense is driven by high tax burden in AFK Vannkraft, as well as parts of the AFK Group of companies being in a build-up phase with negative profit before tax.
Operating in international markets, the AFK Group is naturally exposed to currency fluctuations. Revenue growth in ENRX, NSSLGlobal and Tekna was positively fueled by a weakened NOK compared to the first quarter of 2023.
VOLUE
Total operating revenue in the first quarter amounted to NOK 400 million (339 mil- lion), corresponding to a growth rate of 18% when comparing to the first quarter of 2023. SaaS revenues were NOK 126 million in the quarter, an increase of 42% compared to the first quarter of 2023, representing 31% of total revenue. ARR grew at a rate of 27%, constituting 71% of total revenue in the quarter. Adjusted EBITDA in the quarter was NOK 83 million (55 million), corresponding to an adjusted EBITDA of 21% (16%). Large ongoing changes in the energy markets drive growth and further business opportunities for Volue.
ENRX
Total operating revenue in the first quarter amounted to EUR 46.2 million (41.9 mil- lion), a 10% increase from the same quarter in 2023. Revenue growth was driven by higher activity level within the Heat division, with solid growth in Europe and North America. EBIT for the quarter ended at EUR 4.0 million (3.4 million), corresponding to a margin of 8.6%. Total order intake for the quarter ended at EUR 35.1 million (41.1 million), and the backlog per quarter end was EUR 74.3 million (94 million). Although the market for heating products is still considered strong, a somewhat softer market and delayed customer investment decisions, is expected to impact growth.
NSSLGLOBAL
NSSLGlobal reports continued strong sales and operating profit as well as solid order intake. Revenue in the first quarter was GBP 21.8 million (23.9 million) and operating profit ended at GBP 4.5 million (4.1 million), corresponding to an operating margin of 20% (18%). NNSSLGlobal won new business estimated to GBP 91.5 million during the quarter, of which a significant amount was due to a five year Governmental Communication Satellite contract with an option for two additional years. NSSLGlobal's sales and pipeline continues to be strong across both maritime and governmental sectors.
12 | ARENDALS FOSSEKOMPANI Q1 INTERIM REPORT |
TEKNA
Total revenue for the quarter came in at CAD 8.7 million (9.4 million). The 8% decline from the same period previous year was partly driven by lower investments in new 3D-printing machines, as well as lower Systems sales, which are volatile in nature. Adjusted EBITDA amounted to CAD -2.6 million (-1.2 million) driven by lower top line, as well as one-off items related to a joint venture in France. Total order backlog at the end of the quarter was CAD 22.9 million (26.4 million), driven by reduction in the Systems segment. Order backlog for Advanced Materials was up 17% since the last quarter.The pipeline for Systems projects for the remainder of the year is strong, and Tekna continues to experience strong demand for its advanced materials, despite a current slow-down in the 3D-printing machine segment.
AMPWELL
Total revenue amounted to EUR 0.8 million (EUR 1.5 million) in the first quarter. Commeo is experiencing reduced investment levels from its C&I target segment, and is working continuously to improve its cost position and market its premium battery module solutions. This work has taken longer than expected, and Commeo has struggled to meet the market requirements and gain traction during 2023 and the start of 2024. The company is also experiencing delayed and longer sales processes driven by a softer German economy and pending battery subsidy schemes.
Operational ramp-ups in Cellect Energy and parent company Ampwell also contributed negatively to margins in the quarter.
SHARE PRICE LAST 10 YEARS (NOK)
Share price | Share price incl. accumulated dividend (reinv.) |
1,000
900
800
700
600
500
400
300
200
100
2024 | ARENDALS FOSSEKOMPANI GROUP | 13 |
AFK VANNKRAFT
Electricity prices in the quarter were significantly down from the same period last year, with the NO2 price area averaging EUR 64.5/MWh (EUR 108 MWh) in the quar- ter. Power generation was comparable to the same period last year of 161 GWh (167 GWh). Lower prices reduced quarterly revenues and operating profit to NOK 122 million (190 million) and NOK 95 million (161 million), respectively.
Arendals Fossekompani's financial position remains solid. The company's available cash on 31 March amounted to NOK 1,064 million. In addition, the company has undrawn credit facilities of NOK 903 million, securing available liquidity of NOK 1,967 million as per end of the quarter.
EVENTS AFTER THE CLOSE OF THE QUARTER
On 15 May, the Board of Directors decided to pay an ordinary cash dividend of NOK
1.00 per share for the first quarter of 2024. The dividend is set to be paid on 31 May 2024.
OUTLOOK
There is ongoing uncertainty associated with geopolitical turmoil, supply chain constraints, inflation, interest rates, as well as the development of energy prices. In this unpredictable environment, Arendals Fossekompani's solid financial position enables continued support of the portfolio companies, both in handling short-term challenges but also in continued investments to strengthen their long-term compet- itiveness. In light of the market's estimated power price trend for 2024, revenues and operating profit forAFK Vannkraft is expected to be lower in 2024 compared to 2023. Following high activity levels in all portfolio companies, AFK Group revenues are expected to be higher in 2024 than in 2023. Operating profit is expected to be lower than in 2023, largely driven by lower expected electricity prices, as well reduced margins in NSSLGlobal and increased operational losses for Alytic and Ampwell.
SHARE PRICE
There is a total of 55,995,250 shares in the company. The share price on 31 March 2024 was NOK 182.6 (NOK 217.5), corresponding to a decrease of -16% since 31 March 2023. When including direct yield (dividend payouts) in the same period, total decrease in shareholder value was -14%. AFK's total market capitalization was NOK
10.2 billion at the end of March 2024. For the 10-year period from March 2014 to March 2024, compounded annual return to AFK shareholders was 14% (25% includ- ing dividends).
Comp. annual return %
25%
14%
3.31.14 | 3.31.15 | 3.31.16 | 3.31.17 | 3.31.18 | 3.31.19 | 3.31.20 | 3.31.21 | 3.31.22 | 3.31.23 | 3.31.24 |
14 | ARENDALS FOSSEKOMPANI Q1 INTERIM REPORT |
2024 | GROUP MANAGEMENT | 15 |
Group
Management
FINANCIAL FIGURES (MNOK) | Q1 2024 | Q1 2023 | Q4 2023 | FY 2023 |
Revenue and other income | 5 | 3 | 3 | 13 |
Operating profit (EBIT) | -21 | -18 | -24 | -78 |
Operating margin | - | - | - | - |
Earnings before tax (EBT) | 124 | 144 | -36 | 97 |
Earnings after tax (EAT) | 118 | 133 | -30 | 92 |
Arendals Fossekompani Group Management employs 18 people at the head
office in Arendal. The team focuses on identification and development of new sustainable business opportunities, active ownership of portfolio companies and management of financial investments.
Head office
Arendal, Norway
Chair
Trond Westlie
Chief Executive Officer Benjamin Golding
Employees 21
Countries 1
Combining industrial, technological and capital markets expertise, Arendals Fossekompani's Group Management identifies and develops opportunities for value creation. As an active owner of our portfolio companies, we drive strategy develop- ments, financing, restructuring and transactions to ensure long-term sustainable value creation.
Arendals Fossekompani has an attractive portfolio positioned in verticals driven by global megatrends such as the Energy transition , Digitalisation & Big Data Analytics, and Electrification & Materials. Our companies are both listed and privately owned, and Arendals Fossekompani is - as part of our strategy - the majority owner.
Arendals Fossekompani Group Management continues to focus on developing the portfolio of companies through active ownership.
FINANCIAL POSITION
Arendals Fossekompani's financial position remains solid. The parent company's available cash on the 31st of March amounted to NOK 1,064 million. In addition, the company has undrawn credit facilities of NOK 903 million, securing available liquidity of NOK 1,967 million as per end of the quarter.
16 | ARENDALS FOSSEKOMPANI Q1 INTERIM REPORT | 2024 | ARENDALS FOSSEKOMPANI ASSETS | 17 |
Arendals
Fossekompani
Assets
Investments are made based on a long-term perspective and concentrated within four areas: Digitalisation & Big Data Analytics, Electrification & Materials, Energy Transition, and Property.
Digitalisation & Big Data Analytics
Anything that can be digital, will be digital. By enabling and assisting digital transformation and providing critical insight and commmunicaton services, our portfolio of companies are frontrunners in the digital space.
AFK ownership | Head office |
60% | Oslo, Norway |
Market cap (31.03) | Listed on |
NOK 4,315 million | Oslo Børs |
AFK ownership | Head office |
80% | London, UK |
Electrification & Materials
Anything that can be electric, will be electric. As a result, demand for electricity and storage will grow, as will demand for new materials and additive manufacturing. We invest in companies that install intellegence into an electric future and who enable more efficient manufacturing of better products.
AFK ownership | Head office |
70% | Sherbrooke, Canada |
Market cap (31.03) | Listed on |
NOK 924 million | Oslo Børs |
AFK ownership | Head office |
95% | Skien, Norway |
Energy Transition
We have produced hydropower for generations. As the world is shifting away from fossil fuels, we are looking to capitalize on our competence and history to contribute to a more sustainable energy system.
AFK ownership | Head office |
100% | Froland, Norway |
AFK ownership | Head office |
100% | Arendal, Norway |
AFK ownership | Head office |
100% | Arendal, Norway |
Property
AFK ownership | Head office | AFK ownership | Head office |
95% | Arendal, Norway | 100% | Arendal, Norway |
18 | ARENDALS FOSSEKOMPANI Q1 INTERIM REPORT | 2024 | OUR PORTFOLIO OF DIGITALISATION & BIG DATA ANALYTICS COMPANIES | 19 |
Our portfolio of Digitalisation & Big Data Analytics Companies
Anything that can be digital, will be digital.
By enabling and assisting digital transformation and providing critical insight and communication services, our portfolio of companies are frontrunners in the digital space.
AFK ownership | Head office |
60% | Oslo, Norway |
Market cap (31.03) | Listed on |
NOK 4,315 million | Oslo Børs |
AFK ownership | Head office |
80% | London, UK |
AFK ownership | Head office |
95% | Arendal, Norway |
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Disclaimer
Arendals Fossekompani ASA published this content on 16 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 May 2024 06:51:07 UTC.
