Arendals Fossekompani

Investor Presentation • Aug 18, 2023

Presentation of Q2 and Half-year Interim Report 2023

18 August 2023

arendalsfossekompani.no

Disclaimer

This Presentation includes and is based on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ from the projected results. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions and the economic conditions of the regions and industries that compose major markets for the businesses of Arendals Fossekompani ASA and its subsidiaries and affiliates (the "AFK Group"). These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions.

Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for the businesses of the AFK Group, energy prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time in the Presentation. Although the AFK Group believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation.

The AFK Group is making no representation or warranty, express or implied, as to the accuracy, reliability or completeness of the Presentation, and neither the AFK Group nor any of its directors, officers or employees will have any liability to you or any other persons resulting from the use of the Presentation.

Highlights Q2 2023

32% increase in revenue

Total revenues for Arendals Fossekompani in the second quarter amounted to NOK 1,404 million, 32% higher than the same quarter last year.

Enerim Oy acquisition completed

Volue made its biggest acquisition to date when acquiring Enerim Oy's Energy Market Services division, creating the Nordic market leader in the space of Portfolio-Management-as-a-Service.

Another record for Tekna

Building on high revenues from the first quarter, Tekna increased revenues to CAD 11 million, 17% growth from the first quarter.

NOK 1.00

Dividend to be paid in August

Arendals Fossekompani will pay a quarterly dividend for the second quarter of NOK 1.00 per share.

Lower electricity prices, higher production

Electricity prices in the NO2 price area were significantly lower than last year, while power generation in the quarter was substantially higher.

Charge while driving

ENRX was awarded an EUR 12.7 million contract to deliver a dynamic wireless charging system that will allow vehicles to charge while driving on a highway in Florida.

Portfolio

Big Data Analytics

Anything that can be digital, will be digital. By enabling and assisting a digital transformation and providing decision-making data analytics, our portfolio of companies are frontrunners in the digital space.

Head office Oslo, Norway

Listed at Oslo Børs

Head office London, UK

Head office Arendal, Norway

AFK ownership 60%

Market cap (30.06) 2,298 MNOK

AFK ownership 80%

AFK ownership 95%

Digitalization & Green Energy 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 smartness into the electric future and companies that enable more efficient manufacturing of better products.

AFK ownership Headquarter Sherbrooke, Canada Market cap (30.06) 842 MNOK Listed at Oslo Børs

71%

95%

AFK ownership Head office Skien, Norway

Based on more than a century of hydropower production, we are looking to expand our green energy portfolio. As the world is shifting away from fossil fuels, we are looking to capitalize on our competence and history to develop more fossil-free energy sources.

AFK ownership Head office Arendal, Norway

100%

AFK ownership 100% Head office Arendal, Norway

AFK ownership 100% Head office Arendal, Norway

Property

The Arendal Fossekompani portfolio of properties include an urban development project, an airport and centre for aviation, a site for power-intensive industries, and some stand-alone properties. All property related companies and property investments are comprised in AFK Property.

AFK ownership 100%

Head office Arendal, Norway

AFK ownership 60%	Head office Oslo, Norway	Market cap (30.06) 2,298 MNOK	Listed at Oslo Børs
	Revenue and other income* (MNOK) and operating margin
298	341 294	399 339
Development last 5 quarters

* Note that revenue and other income in Q2 2023 includes nonrecurring other income of NOK 23 million related to the sale of Fire and Chimney product line within the Infrastructure segment.

Q2 update - solid growth and margin expansion

• Operating revenues in the quarter amounted to NOK 375 million (298 million). Adjusted EBITDA in the quarter totaled NOK 63 million (44 million), corresponding to an adjusted EBITDA-margin of 17% (15%).
• Recurring revenue constituted 62% of total revenues and reached NOK 234 million in the quarter, an increase of 27% from the second quarter of 2022.
• SaaS revenues were NOK 98 million in the quarter, an increase of 43% compared to the second quarter of 2022.
• Volue made its biggest acquisition to date when acquiring Enerim Oy's Energy Market Services division, creating the undisputed Nordic market leader in the space of Portfolio-Management-as-a-Service.
• Volue continues to prioritize strategic investments in its SaaS platform and expansion into new markets.
• Guiding: Long-term guidance reiterated from Q1
  • Annual long-term organic growth of 15%.
  • NOK 2 billion in revenues in 2025 (incl. M&A).
  • Year-by-year increase of adjusted EBITDA margin, cash conversion and share of ARR and SaaS revenues.

Enerim acquisition positions Volue to become #1

Acquisition of Enerim Oy's Energy Market Services division

Volue now positioned as first mover with proven service, underpinned by battle proven software platform tailored at new asset owners.

Volue is ready to capture the vast opportunity of 400GW intermittent renewables being brought online by 2030 from new asset owners.

The combined entity will be a market leader for digital services in renewables, positioned to be leading player in Europe by 2030.

Q2 update – continued strong results and pipeline

• Revenues in the quarter were GBP 22.9 million (GBP 23.9 million) and EBIT was GBP 4.6 million (GBP 6.3 million).
• Reduction in revenues and operating profit from Q2 in 2022 was a result of lower airtime revenues, with comparably higher margin, as well as lower equipment invoicing.
• Continued strong results are supported by NSSLGlobal'ssolid customer base, competitive technology and service driven organization.
• During the second quarter, NSSLGlobal won GBP 16.3 million of new business, of which a significant portion are either maritime or governmental project and systems work.
• NSSLGlobal'ssales and pipeline continues to be strong across both governmental and maritime sectors.

Q2 update – ARR growth across the portfolio

The annual recurring revenues (ARR) for the portfolio grew to NOK 36 million, which represents a 21% increase compared to the previous quarter and 38% YTD.

• Kontali

Kontali is experiencing strong demand and customer growth for its new seafood insights portal Edge. ARR grew by 8% compared to the previous quarter.

• Veyt

Veyt grew ARR by 30% compared to the previous quarter. Veyt continued to release new products and improvements on the platform, which was launched in the first quarter.

• Factlines

Strong ARR growth of 48% compared to the previous quarter. New product launches and improvements expected to yield continued strong growth.

• Utel

With a strong emphasis on outbound sales, Utel's sales pipeline is strong and ARR movement in the coming quarters is expected.

All portfolio companies are expected to keep growing recurring revenues and launch new products throughout the year.

AFK ownership 71% Head office Sherbrooke, Canada Market cap (30.06) 842 MNOK Listed at Oslo Børs Development last 5 quarters Revenue (MNOK) and operating margin Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 ^{56 46 51} 71 87 -62% -98% -79% -24% -16%

Q2 update – record revenues and improved margin

• Revenue growth of 45% and adjusted EBITDA improved by CAD 2.6 million compared to Q2 2022.
• Target for the capacity increase program reached. Increasing sales, production and delivery of additive materials remains top priority.
• Order intake of CAD 10.4 million in the quarter, with several significant wins especially in Systems.
• Strong order backlog of CAD 22 million at end of quarter, 19% above Q2 2022, supporting significant revenue growth for 2023 compared to 2022.
• Typical seasonality (summer vacations) in Tekna's main markets will affect the company's revenues in Q3 compared to Q2.
• Guiding: Reiterating a substantial improvement of margins in 2023 compared to 2022, supported by increased production capacity and organizational productivity.

Tekna market outlook

Systems – Market rebound

R&D & PlasmaSonic wind tunnels

CAD 300m

Emerging industry for which Tekna has identified CAD 300m of PlasmaSonic prospects over the next 10 years.

• Re-energized global interest in developing, testing and manufacturing novel materials: Industrial and Academic.
• Emergence of new industrial segments: Space tourism, Satellite Internet & Networks & strategic defence.

Materials – Strong demand

Additive Manufacturing

Up to +30%

Materials sales CAGR 2022-2030 as forecast by Grand View Research and Smartech.

• Growing market with increasing number of OEMs now operating at an industrial scale.

AFK ownership 95% Head office Skien, Norway

Development last 5 quarters Revenue (MNOK) and operating margin

Q2 update – Heat performing well, large Charge contract

• Revenues increased by 20% year-over-year to EUR 37.1 million in the quarter, primarily driven by a higher activity level within the Heat division.
• EBIT for the quarter was EUR 0.9 million, up from EUR 0.0 million last year. The EBIT in the quarter was adversely impacted by restructuring costs of EUR 1.5 million related to ENRX Germany.
• Order intake remains strong. Total order intake for the quarter ended at EUR 37.8 million, compared to EUR 36.2 million in the same quarter last year.
• Order backlog of EUR 171 million, creates strong fundament for continued profitable growth though 2023.
• Aspire contract contributed EUR 12.7 million in order intake. Contract includes delivery of a dynamic wireless charging system allowing vehicles to charge while driving, representing an important milestone for ENRX wireless charging solutions.

Q2 update – ramping up to meet growing demand

• Revenues for the quarter were EUR 3.2 million, driven by increased sales and production capabilities in Commeo.
• Operating profit was EUR -2.6 million. Operational ramp-ups in both Commeo and Cellect Energy, as well as Ampwell parent company, contributed to negative margins in the quarter.
• The first part of Commeo's new production facilitiesis estimated to be finalized in mid-2024 and will over time enable above 1 GWh production capacity.
• During the quarter, Cellect Energy announced a commercial project with Volkswagen Group Charging GmbH (Elli), for the delivery of automated control and communication software which will enable Volkswagen to utilize car batteries to trade on the spot market.

Electricity prices reduced from peak levels

But will increase towards the end of the year

Actual and forecasted EUR/MWh NO2, 2020-2023 Dependent on weather conditions and European power prices

Assuming uniform production, and AFK Vannkraft production of 500 GWh:

A price increase of 1 Euro per MWh results in a 500,000 Euro increase in revenues for AFK Vannkraft.

Strong profitability across the portfolio

• Solid profitability with EBIT in the mature companies Volue, ENRX and NSSLGlobal increasing by NOK 58 million. Tekna with improved profitability.
• Contribution from Hydropower improved EBIT by NOK 39 million as production levels more than offset price decline.
• Outlook: Following high activity levels in all portfolio companies, AFK Group revenues and operating profit for 2023 are expected to be higher than in 2022.

Operating profit (MNOK)	Q2 2023	Q2 2022	Difference
Volue	48	12	+36
NSSLGlobal	63	74	-11
Tekna	-14	-35	+21
ENRX	11	0	+11
AFK Vannkraft (Hydropower)	107	68	+39
Ampwell	-30	-20	-10
Other	-37	-29	-8
Arendals Fossekompani consolidated	148	70	+78

1.1 BNOK in Cash

And more than 2.6 BNOK in available liquidity

Total Available Liquidity in AFK Parent 30.06.23 (MNOK)

Outlook

Energy transition, electrification and digitization will continue to drive growth in portfolio companies.

We do not expect significant new investments on AFK level in short to medium term, and limited capital market activity, however M&A agenda in portfolio companies.

Short to medium term focus on realizing full value potential in existing portfolio.

Capital to be carefully allocated toward accelerating most promising growth opportunities.

Our portfolio spans across the business life cycle

Diversified portfolio ensuring both stable cash flow and attractive growth prospects

Q2 2023 Closing summary

• Strong underlying results with positive outlook
• Balance sheet supports both continued cash dividend and fuelling growth
• Diversified and well positioned portfolio ensuring both stable cash flow and attractive growth opportunities
• Focused business development on-going in all portfolio companies driving growth in long term NAV

18 August 2023 19

Solid P&L for the Arendals Fossekompani group

• Total revenues for the Group amounted to NOK 1,404 million (1,062 million) in the second quarter. Consolidated earnings before tax came in at NOK 148 million (90 million). Ordinary profit after tax, but before non-controlling interests, totalled NOK 41 million (23 million).
• The second quarter was characterized by strong financial and operational performance by the AFK group of companies. Operating profit in the quarter was driven by high hydropower production levels and strong results from key portfolio companies ENRX, Volue, and NSSLGlobal.

P&L consolidated (MNOK)	Q2 2023	Q2 2022
Revenues	1 404	1 062
EBITDA	228	141
EBITDA %	16%	13%
EBIT	148	70
EBIT %	11%	7%
Net Financials & Share of profit/loss of associates	0	20
Earnings before tax	148	90
Tax	-107	-67
Earnings after tax	41	23
1 Basic earnings per Share (NOK)	0.75	0.43

VISITING ADDRESS Langbryggen 9, 4841 Arendal

POSTAL ADDRESS Box 280, 4803 Arendal

+47 37 23 44 00