Arendals Fossekompani

Arendals Fossekompani Asa - 5967007LIEEXZXG4U097 - 2025 5967007LIEEXZXG4U097 2024-01-01 2024-12-31 5967007LIEEXZXG4U097 2023-01-01 2023-12-31 5967007LIEEXZXG4U097 2022-12-31 5967007LIEEXZXG4U097 2022-12-31 ifrs-full:NoncontrollingInterestsMember 5967007LIEEXZXG4U097 2022-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 5967007LIEEXZXG4U097 2022-12-31 ifrs-full:RetainedEarningsMember 5967007LIEEXZXG4U097 2022-12-31 ifrs-full:OtherReservesMember 5967007LIEEXZXG4U097 2022-12-31 ifrs-full:TreasurySharesMember 5967007LIEEXZXG4U097 2022-12-31 ifrs-full:AdditionalPaidinCapitalMember 5967007LIEEXZXG4U097 2022-12-31 ifrs-full:IssuedCapitalMember 5967007LIEEXZXG4U097 2023-01-01 2023-12-31 ifrs-full:NoncontrollingInterestsMember 5967007LIEEXZXG4U097 2023-01-01 2023-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 5967007LIEEXZXG4U097 2023-01-01 2023-12-31 ifrs-full:RetainedEarningsMember 5967007LIEEXZXG4U097 2023-01-01 2023-12-31 ifrs-full:OtherReservesMember 5967007LIEEXZXG4U097 2023-01-01 2023-12-31 ifrs-full:TreasurySharesMember 5967007LIEEXZXG4U097 2023-01-01 2023-12-31 ifrs-full:AdditionalPaidinCapitalMember 5967007LIEEXZXG4U097 2023-12-31 5967007LIEEXZXG4U097 2023-12-31 ifrs-full:NoncontrollingInterestsMember 5967007LIEEXZXG4U097 2023-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 5967007LIEEXZXG4U097 2023-12-31 ifrs-full:RetainedEarningsMember 5967007LIEEXZXG4U097 2023-12-31 ifrs-full:OtherReservesMember 5967007LIEEXZXG4U097 2023-12-31 ifrs-full:TreasurySharesMember 5967007LIEEXZXG4U097 2023-12-31 ifrs-full:AdditionalPaidinCapitalMember 5967007LIEEXZXG4U097 2023-12-31 ifrs-full:IssuedCapitalMember 5967007LIEEXZXG4U097 2024-01-01 2024-12-31 ifrs-full:NoncontrollingInterestsMember 5967007LIEEXZXG4U097 2024-01-01 2024-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 5967007LIEEXZXG4U097 2024-01-01 2024-12-31 ifrs-full:RetainedEarningsMember 5967007LIEEXZXG4U097 2024-01-01 2024-12-31 ifrs-full:OtherReservesMember 5967007LIEEXZXG4U097 2024-01-01 2024-12-31 ifrs-full:TreasurySharesMember 5967007LIEEXZXG4U097 2024-01-01 2024-12-31 ifrs-full:AdditionalPaidinCapitalMember 5967007LIEEXZXG4U097 2024-12-31 5967007LIEEXZXG4U097 2024-12-31 ifrs-full:NoncontrollingInterestsMember 5967007LIEEXZXG4U097 2024-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 5967007LIEEXZXG4U097 2024-12-31 ifrs-full:RetainedEarningsMember 5967007LIEEXZXG4U097 2024-12-31 ifrs-full:OtherReservesMember 5967007LIEEXZXG4U097 2024-12-31 ifrs-full:TreasurySharesMember 5967007LIEEXZXG4U097 2024-12-31 ifrs-full:AdditionalPaidinCapitalMember 5967007LIEEXZXG4U097 2024-12-31 ifrs-full:IssuedCapitalMember 5967007LIEEXZXG4U097 2023-01-01 2023-12-31 ifrs-full:IssuedCapitalMember 5967007LIEEXZXG4U097 2024-01-01 2024-12-31 ifrs-full:IssuedCapitalMemberiso4217:NOK iso4217:NOKxbrli:shares Annual Report 2024 FOR GENERATIONS FOR GENERATIONS FOR GENERATIONS FOR GENERATIONS FOR 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 utilised 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, digitalisation, 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. FOR GENERATIONS FOR GENERATIONS FOR GENERATIONS FOR GENERATIONS FOR GENERATIONS FOR GENERATIONS FOR GENERATIONS 2 3 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE HOW TO READ THIS REPORT The report is structured into four sections: Introduction, Board of Directors Report, Financial Statement and Signatures. We have ensured compliance with the Corporate Sustainability Reporting Directive (CSRD) from the European Commission and Norwegian Accounting Act, presenting these requirements within relevant sections of the report. Throughout the report, you will ﬁnd codes such as 'GOV-1' and 'SBM-3,' which denote speciﬁc disclosure requirements or data points as per the European Sustainability Reporting Standards (ESRS). For a detailed index of ESRS disclosure requirements and codes, please refer to page 77. Contents Introduction 6 Highlights 8 Letter from the CEO 14 INTRODUCTION BOARD OF DIRECTORS REPORT FINANCIAL STATEMENTS About Arendals Fossekompani 16 Who we are 20 Strategy and business model 20 Risk and uncertainties 21 Value creation for generations 22 Performance 24 Arendals Fossekompani Group 26 Arendals Fossekompani Group Management 30 Volue 32 ENRX 34 NSSLGlobal 36 Tekna 38 AFK Vannkraft 40 Alytic 42 AFK Eiendom 44 Shareholder information 46 Reporting 100 years ago 48 Corporate Governance 50 Corporate governance report 52 Board of Directors 60 Sustainability Statement 62 General 62 Basis for preparation 64 Governance 65 Strategy 68 IRO management 70 ESRS index 77 Environment 80 E1 Climate change 82 E5 Resource use and circular economy 92 EU Taxonomy 94 Social 116 S1 Own workforce 118 Governance 126 G1 Business conduct 128 Entity-speciﬁc: cyber security 130 Signatures by the BoD and the CEO 131 Financial Statements 132 Consolidated ﬁnancial statements 134 Notes 142 SIGNATURES Signatures 192 Declaration by the BoD and the CEO 194 Auditor's Reports 195 4 5 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Highlights 8 Letter from the CEO 14 Introduction 6 7 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Group ﬁnancial highlights FINANCIAL FIGURES (MNOK) 2024 2023 2022 2021 2020 Arendals Fossekompani consolidated Revenue & other income 4,363 3,897 4,587 4,232 3,157 Operating proﬁt (EBIT) 394 444 429 450 161 Operating margin (%) 9% 11% 9% 11% 5% Earnings before tax (EBT) 227 456 426 332 99 Proﬁt (-loss) cont. operations -42 61 -33 97 66 Proﬁt (-loss) 2,244 -30 -33 126 120 3,157 4,232 4,587 3,897 4,363 2024 2023 2022 2021 2020 161 450 429 444 394 2024 2023 2022 2021 2020 2024 2023 2022 2021 2020 -30 -33 126 120 2,244 REVENUE & OTHER INCOME (MNOK) OPERATING PROFIT (MNOK) PROFIT (-LOSS) (MNOK) 4,363 Group revenue (MNOK) 2,244 Proﬁt (-loss) (MNOK) 9% Group operating margin mNOK 2024 2023 2022 2021 2020 Operating revenue 1,634 1,464 1,217 1,041 891 Ownership: 40% Adjusted EBITDA 362 267 203 214 196 Head ofﬁce: Oslo, Norway EBIT -24 87 40 45 82 Employees: 822 NIBD 342 382 -330 -267 -293 Equity value in AFK parent: mNOK 2,571 ARR 1,175 984 765 667 572 Debt to AFK Parent: mNOK 0 Cash EBITDA 134.5 42.2 46.9 87.1 54.9 mNOK 2024 2023 2022 2021 2020 Operating revenue 292 320 199 184 150 Ownership: 70% Adjusted EBITDA -54 -32 -95 -32 10 Head ofﬁce: Sherbrooke, Canada EBIT -63 -97 -153 -89 -24 Employees: 185 NIBD 172 125 -28 -211 154 Equity value in AFK parent: mNOK 323 Revenue (Adv. Materials) 209 201 140 123 93 Debt to AFK Parent: mNOK 217 Market cap. (31.12) 414 1 039 739 4 345 - mNOK 2024 2023 2022 2021 2020 Operating revenue 1,914 1,800 1,338 1,171 1,104 Ownership: 95% EBITDA 222 198 75 143 109 Head ofﬁce: Skien, Norway EBIT 134 116 -3 83 41 Employees: 1,158 NIBD 1,054 777 558 172 185 Equity value in AFK parent: mNOK 454 Revenue (Heat) 1,859 1,750 1,331 1,171 1,104 Debt to AFK Parent: mNOK 452 EBIT (Heat) 182 139 40 83 41 mNOK 2024 2023 2022 2021 2020 Revenue 1,400 1,206 1,042 907 898 Ownership: 80% EBITDA 295 231 255 208 214 Head ofﬁce: London, UK EBIT 263 211 209 166 162 Employees: 249 NIBD -474 -346 -340 -299 -241 Equity value in AFK parent: mNOK 273 Gov. & defense revenue 896 675 626 548 521 Debt to AFK Parent: mNOK 0 Paid dividend 138 131 118 106 133 mNOK 2024 2023 2022 2021 2020 Ownership: 96% Revenue 67 46 41 27 2 Head ofﬁce: Arendal, Norway EBITDA -49 -71 -41 -12 -1 Employees: 119 EBIT -88 -85 -46 -16 -1 Equity value in AFK parent: mNOK 280 NIBD 14 4 -18 -17 -24 Debt to AFK Parent: mNOK 4 ARR 55 42 26 mNOK 2024 2023 2022 2021 2020 Revenue 363 511 606 373 63 EBITDA 261 425 545 308 7 Ownership: 100% EBIT 253 414 535 298 -2 Head ofﬁce: Froland, Norway Avg. Power price (EUR/MWh) 50 79 211 71 11 Employees: 16 Production (GWh) 607 542 351 517 482 Ownership: 100% mNOK 2024 2023 2022 2021 2020 Head ofﬁce: Arendal, Norway Revenue 295 18 35 510 10 Employees: 5 EBITDA 29 2 6 40 -2 Equity value in AFK parent: mNOK 228 EBIT 13 -10 -7 27 -11 Debt to AFK Parent: mNOK 111 NIBD 213 361 136 70 358 8 9 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Operational highlights Positioned Volue for further growth In partnership with Advent International and Generation Investment Management, Volue was delisted from the Oslo Stock Exchange, reducing our ownership from 60% to 40% and realising NOK 1 billion in net cash proceeds. NSSLGlobal reported the highest revenue and operating proﬁt in the company’s history, in addition to securing new maritime NAVCOM, IT security, governmental engi- neering, and defense contracts across Europe. Celebrating its 55 th anniversary, the company continues to evolve to meet the demands of a rapidly changing market. ENRX achieved its highest- ever revenue and operating proﬁt in 2024, driven by robust performance in the North American market for its Heat division. The company continued to focus on strengthening its operational capabilities and optimising its product offerings, positioning itself for sustained growth moving forward. Tekna continued to execute on its comprehensive proﬁtability program in 2024, with recurring cost reductions expected to positively impact proﬁtability and cash generation in 2025. The Alytic portfolio saw strong focus on commercialisation, expanding product offerings and strengthening management teams including new CEOs in Utel, Kontali and Factlines. AFK Eiendom won an attractive contract to build a new production facility for the electronics manu- facturing company, Kitron. The development marks the opening of a new industrial area in Arendal. Volue delivered strong top line growth of 12% in 2024 and an adjusted EBITDA margin of 22%. The company implemented a comprehensive restructuring program signiﬁcantly reducing the operational cost base, paving the way for continued margin expansion. Additionally, Volue acquired PowerBot GmbH, a leading provider of algorithmic trading software. New hydro- power plant Construction of the new hydro- power plant Kilandsfoss has progressed according to schedule. Once completed, the plant is expected to generate an average of 38 GWh annually. Kilandsfoss is scheduled to begin electricity production in 2026. EU Taxonomy Arendals Fossekompani contributes to climate change mitigation, climate change adaptation, and transition to circular economy. Aligned turnover was 8.3%, while eligible, non-aligned turnover accounted for 51.5%. Aligned CapEx was 0.9%, and eligible, non- aligned CapEx was 80.3%. Aligned OpEx was 11.5%, with eligible, non-aligned OpEx at 69.1%. Vergia divested and discontinued battery investment To optimise and de-risk the portfolio, Arendals Fossekompani sold the renewable development company Vergia to Swiss Life Asset Managers and ceased investment in battery company, Commeo. 10 11 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Key ﬁnancial ﬁgures ARENDALS FOSSEKOMPANI GROUP (MNOK) 2024 2023 2022 2021 2020 Proﬁt & loss statement Revenue and other income 4,363 3,897 4,587 4,232 3,157 EBITDA 607 611 726 697 401 EBITDA margin (%) 14% 16% 16% 16% 13% Operating proﬁt (EBIT) 394 444 429 450 161 Operating margin (%) 9% 11% 9% 11% 5% Net ﬁnancial items -133 26 37 -106 -47 Share of proﬁt/(loss) from associated companies -34 -14 -40 -12 -14 Earnings before tax (EBT) 227 456 426 332 99 Income tax expense 270 394 458 235 34 Proﬁt (-loss) from continuing operations -42 61 -33 97 66 Proﬁt (-loss) from discontinued operations 2,286 -91 - 29 54 Proﬁt (-loss) 2,244 -30 -33 126 120 Proﬁt (-loss) attributable to equity holders 2,238 33 6 107 62 Statement of ﬁnancial position Non-current assets 5,133 4,247 3,277 2,432 2,412 Current assets 3,720 4,813 4,563 4,406 4,575 Equity excl. Non-controlling interests 5,144 3,001 3,127 3,368 3,553 Total equity 5,414 3 639 3,784 3,909 3,856 Non-current interest-bearing liabilities 1,505 2 470 1,054 808 601 Other non-current liabilities 104 201 123 109 122 Current interest-bearing liabilities 337 469 340 301 784 Other current liabilities 1,492 2,282 2,540 1,711 1,624 Total liabilities 3,438 5,421 4,056 2,929 3,131 Total assets / total equity & liabilities 8,852 9,060 7,840 6,838 6,987 Net interest-bearing debt 1 54 1,015 -947 -1,599 -348 Liquidity and cash ﬂow Cash and cash equivalents (31.12) 1,800 1,929 2,340 2,708 1,688 Net cash from operating activities 743 -398 483 848 125 Cash ﬂow -185 -362 -392 1,006 544 ARENDALS FOSSEKOMPANI PARENT COMPANY (MNOK) 2024 2023 2022 2021 2020 Proﬁt & loss statement Revenue and other income 377 519 628 382 70 EBITDA 188 350 463 249 -45 Operating proﬁt (EBIT) 174 335 449 236 -55 Net ﬁnancial items 2,388 175 547 1,345 557 Earnings before tax (EBT) 2,562 510 996 1,581 502 Income tax expense 138 299 392 159 -18 Proﬁt (-loss) 2,423 211 604 1,422 520 Statement of ﬁnancial position Equity ratio (%) 82% 61% 71% 79% 82% Book value of equity 5,267 3,026 3,027 2,872 3,383 Total assets / total equity & liabilities 6,391 4,947 4,238 3,629 4,101 Net interest-bearing debt 1 -45 495 -430 -860 -93 Intercompany loans and receivables 852 1 602 787 71 287 Liquidity and cash ﬂow Cash and cash equivalents 913 1,064 1,160 1,411 766 Available liquidity 2 2,899 2,196 3,107 3,411 2,555 Net cash from operating activities -72 -67 393 236 -154 Key ﬁgures per share Share price (31.12, NOK) 142.4 164.8 251.5 440 183 Dividend per share (NOK) 4.00 3.95 7.55 37.08 3.44 Number of outstanding shares (31.12) 54.94 54.86 54.88 54.90 54.88 1. Intercompany loans are excluded from the Net Interest Bearing Debt (NIBD) deﬁnition. See Note 17 and 25 for further information. 2. Cash and cash equivalents plus undrawn credit facilities. 12 13 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Letter from the CEO With over a century of industrial development experience, Arendals Fossekompani continues to leverage our strengths as active owners and developers of companies building next generation industrial technologies. Turbulence has persisted throughout 2024 with ongoing wars in Ukraine and the Middle East, climate change increasingly impacting our weather systems, and large political shifts resulting from the biggest election year in history. Our response has been to build resilience. We have focused on improving the operational performance of our businesses and increasing the robustness of our portfolio. OPTIMISING THE PORTFOLIO – LESS RISK, MORE FOCUS, NEW PARTNERS In 2024, we positioned Volue for realising its full potential by delisting the company off the Oslo Stock Exchange together with our new partners, Advent International and Generation Investment Management. The partner- ship secures access to capital, resources and networks necessary to take Volue to the next level. Together with our new partners, our clear goal is to further acceler- ate Volue’s growth and value creation to the beneﬁt of Arendals Fossekompani’s shareholders. As part of the transaction, we reduced our ownership in Volue from 60% to 40% at premium pricing, thereby realising a ﬁnancial gain of NOK 3.3 billion and net cash proceeds of NOK 1 billion while maintaining signiﬁcant exposure to Volue’s growth journey. Managing risk has also been an important theme in 2024. We have de-risked the portfolio by decreasing our exposure to capital intensive and subsidy dependent business models. As part of this strategy, we divested renewable development company, Vergia. We also decided to discontinue our engagement in the battery space due to the increasing cost disadvantage of European production and generally challenging market conditions. This resulted in an impairment of Arendals Fossekompani's shareholding and shareholder debt in Commeo. Benjamin Golding Chief Executive Ofﬁcer, Arendals Fossekompani ASA IMPROVING OPERATIONAL PERFORMANCE IN OUR BUSINESSES Driving growth and continuous operational improve- ment in our businesses is an important source of value creation for Arendals Fossekompani. Our main port- folio companies delivered strong operating results in 2024 with record performance from both ENRX and NSSLGlobal, while normalising power prices resulted in lower hydropower proﬁts than last year. Overall, consolidated revenues for the group grew by 12%, operating margin ended at 9% and our balance sheet was strengthened from a net debt position of NOK 495 million at the start of the year, to net cash of NOK 45 million at the end of the year. Volue saw continued revenue growth and underlying margin expansion in 2024. In addition to the de-list- ing, the company also completed the acquisition of algo-trading company PowerBot GmbH and executed a signiﬁcant restructuring programme laying the foun- dation for further margin expansion in the year to come. ENRX continued to strengthen its Heat business during the year with both healthy revenue growth as well as margin expansion, resulting in the best year in the company’s history. New factories were established in Poland and China. The company also progressed its entry into the emerging high power wireless charging market, where it is taking a leading position in deﬁning industry standards. During the year, NSSLGlobal grew its proﬁts and contin- ued to expand its efforts in maritime and governmental projects, providing secure connectivity through GEO and LEO satellite networks together with customised hardware and software solutions for critical operations as well as for crew welfare. Like ENRX, NSSLGlobal also reported the highest revenue and operating proﬁt in the company’s history. Tekna improved its operating result through a series of proﬁtability improvement initiatives during the year. After completing a comprehensive programme to increase powder production capacity, the company also set new production records during the year. Carefully managing costs and cash while expanding addressable market will remain the key focus for Tekna in the year to come. LOCAL VALUE CREATION We are expanding our local hydropower generation capacity. Construction of the new hydropower plant, Kilandsfoss, is progressing according to schedule. When ﬁnished, it will produce 38 GWh per year, equiva- lent to the energy consumption of approximately 2,000 households. Kilandsfoss hydropower plant is scheduled to start production of electricity in 2026. During the year, AFK Eiendom won an attractive con- tract to build a new production facility for the electronics manufacturing company Kitron, in doing so opening a new industrial area in Arendal. We have also contributed to social and community initiatives in the region. Since 1896, we have supported communities and created value locally. This is a source of pride in our company as we look forward to creating new partnerships and con- tinuing our inﬂuence in the years to come. 2024 has been a year with both difﬁcult challenges and important achievements. As we stand at the start of a new year, we do so with a more focused and balanced portfolio, new partners, improved operations and a strong balance sheet. All is set for creating value for our owners, employees, customers and society at large. None of which is possible without our people. Thank you all for your commitment, hard work, innovation and grit. You are our greatest strength and our greatest asset. I sincerely look forward to continuing to create value together, for generations to come. 14 15 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE About Arendals Fossekompani Who we are 20 Strategy and business model 20 Risk and uncertainties 21 Value creation for generations 22 16 17 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE NUMBER OF EMPLOYEES BY COUNTRY Dots on map reﬂect approximate locations Norway 800 Finland 70 Malaysia 9 Germany 262 France 65 Japan 8 India 262 Denmark 50 Italy 7 China 202 Sweden 37 Singapore 5 United Kingdom 183 Spain 29 Austria 1 Poland 178 Switzerland 20 Ireland 1 Canada 161 Thailand 15 South Korea 1 United States 115 Brazil 12 Romania 92 Netherlands 10 Total 2,594 Arendals Fossekompani Around the world Digital energy and infrastructure solutions for the green transition Employees 822 Ownership 40% Head ofﬁce Oslo, Norway Countries 12 Arendals Fossekompani Group Management Employees 20 Head ofﬁce Arendal, Norway Countries 1 Leading provider of advanced materials for the global additive manufacturing industry, and plas- ma systems for industrial research and production Employees 185 Ownership 69.5% Head ofﬁce Sherbrooke, Canada Countries 5 Market cap (31.12) 414 MNOK Listed on Oslo Børs Cyber secure space and satellite communication services anywhere Employees 249 Ownership 80% Head ofﬁce London, UK Countries 9 Leading international tech company within induction heating and induction charging Employees 1,158 Ownership 95% Head ofﬁce Skien, Norway Countries 15 Active investor and transformer of data intensive companies Employees 119 Ownership 96% Head ofﬁce Arendal, Norway Countries 6 500 GWh hydropower production providing steady cash ﬂow Employees 16 Ownership 100% Head ofﬁce Froland, Norway Countries 1 Portfolio of property investments and development projects Employees 5 Ownership 100% Head ofﬁce Arendal, Norway Countries 1 18 19 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Who we are Arendals Fossekompani is a long-term industrial investor that combines industrial, technological, and capital markets expertise to identify and develop opportunities for sustainable value creation. Our portfolio companies operate in industries such as B2B software and analytics, satellite communications, induction technology, industrial 3D printing, property, and hydropower. Our companies employ over 2,500 professionals across 25 countries. Established in 1896, we have been a producer of renewable hydropower for more than 100 years. Our company is headquartered in Arendal and has been listed on the Oslo Stock Exchange since 1913. We are a proud builder of next generation companies within energy and technology. This is our legacy, our history, our future. It is what we have done, and what we will continue to do. For generations. Our values Arendals Fossekompani is a collaborative, dynamic and responsible company with a long-term perspective. SBM-1 Strategy Arendals Fossekompani generates long-term value through three core activities: 1. Identifying and investing in new portfolio companies. 2. Driving value creation in existing portfolio companies through active ownership. 3. Realising value from existing portfolio companies. With over a century of industrial development experi- ence, our investment approach leverages our strengths. We create value through strategic use of capital, exper- tise and network. Our goal is to create an attractive total return for our shareholders in a sustainable manner. Active ownership: As an owner, we actively work with the boards and management teams of our portfolio companies. We support our companies in setting ambi- tious targets and developing strategies to reach them, we monitor performance, support M&A and ﬁnancing, and work to build strong boards, management teams and leaders. Long-term perspective: In every investment, we have a long-term view of our objectives. We retain ownership of our portfolio companies for as long as we are the best owner, ensuring long-term value and stability. Forward-thinking: We seek to build world-leading positions in industries driven by global megatrends such as Energy transition, Digitalisation and Deglobalisation. We believe that a responsible approach to environmental, social, and governance (ESG) factors is essential for achieving solid risk-adjusted returns over time. INVESTMENT CRITERIA We invest in forward-looking B2B companies within energy and/or technology. Ownership: We look for controlling stakes in companies, either independently or in complementary partnerships with others. We invest in both listed and unlisted shares. Geography: We seek to invest primarily in Nordic companies with a global market potential. Maturity: We search for growth-stage companies with a proven business model and self-ﬁnancing operations Sustainability: Investments should contribute to, or have the potential to contribute to, at least one of the six environmental objectives deﬁned in the EU Taxonomy. SUSTAINABLE VALUE CREATION Sustainability is an integral part of our investment strat- egy, and we work closely with our portfolio companies to enhance our collective performance on environmen- tal, social and governance topics (ESG). We have four strategic material sustainability topics: Climate change, Resource Use and Circular Economy, Own Workforce and Business Conduct. Each strategic focus area has speciﬁc targets to ensure that we maximise our positive impacts, reduce our negative impacts, harness the opportunities presented to us, and manage or mitigate the associated risks. GROWTH DRIVERS Three global megatrends will continue to drive the growth of our portfolio companies. Energy transition. Despite political turmoil, increased effects of ongoing climate change, as well as ambitious national and international climate targets are driving investments in renewable energy, energy infrastructure solutions, electriﬁcation and recycling. This creates sig- niﬁcant investment and business opportunities through- out the energy system. Tomorrow's energy system is assumed to be decentralised and low-carbon and will create a complex system of pro-sumers and ﬂexibility solutions. The shift towards electriﬁcation and energy efﬁciency is expected to continue. The energy transi- tion is a key value driver for Volue, ENRX, Alytic and AFK Vannkraft. Digitalisation. All industries are undergoing rapid digitalisation, driven by exponential growth in data and the increasing need to transform data into actionable insights. The transformation from traditional on-prem- ises software solutions to software-as-a-service (SaaS) continues in full force. Artiﬁcial intelligence will continue to be integrated into an increasing scope of applications. This opens up new business opportunities and forces businesses in all sectors to adapt. For software vendors, this provides the opportunity to deliver new products with stable revenue models. Digitalisation is a key value driver for Volue, NSSLGlobal and Alytic. Deglobalisation. Geopolitical tensions create uncer- tainty in value chains, increased protectionism and the need for new ways of producing critical components. Tensions between East and West are driving increased investment in sectors such as space and defence. Deglobalisation is a value driver for NSSLGlobal and Tekna. RISK AND UNCERTAINTY We are faced with ongoing uncertainty associated with geopolitical turmoil and economic volatility that is likely to lead to supply chain disruptions, shifts in interest rates, and ﬂuctuating energy prices. Cyber risk is also high on Arendals Fossekompani’s radar, due to the increasing global incidence of attacks to digital infra- structure and security measures, and the composition of our portfolio companies. In addition, climate change presents worsening environmental threats to and evolving compliance requirements on businesses. These factors, among others, require continual mitigation and attention to the knock-on effects of risks, such as to cor- porate cost bases and governance processes. Arendals Fossekompani updates its strategy on an annual basis to adapt to the evolving risk and opportu- nity landscape by monitoring, assessing and continually working to mitigate risk. Our Board of Directors reviews the company’s risk proﬁle and strategic adaptation to it, and in 2024 updated the company’s approach for the next three-year period to 2027. We conduct company-wide consultations on risk annu- ally and maintain an up-to-date risk log that reﬂects changes in our businesses and M&A activities, geopolit- ical events, regulatory environments and the availability of information. Risk assessment ﬁndings and mitiga- tion measures, as well as associated opportunities, are anchored in Arendals Fossekompani’s management team and overseen by our Board of Directors. In 2024-2025, the most signiﬁcant risks Arendals Fossekompani faces as a Group are: Risk Risk mitigating action Market and ﬁnancial risks Increasing risk related to escalating geopolitical unrest Continued risk to portfolio of economic downturn and volatility and unforeseen capital demands Mitigation measures in place include close monitoring of critical supply chains and contingency planning, as well as ongoing tight performance management Operational risks Continued risk of increasing cost bases, governance inefﬁciencies and cyber security incidents Mitigation measures in place include hands-on and collaborative ownership, internal controls and preparedness, and contingency planning Compliance and environmental risks Continued risk of extreme weather events, regulatory changes or non-compliance, and souring of community relations Mitigation measures in place include capacity-building and collaboration across the Group on ESG More information on our risk proﬁle is outlined in the sustainability statement and the ﬁnancial statements. 20 21 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Value Creation for Generations 1896 Company founded 1913 Electricity and industry 1927 More hydropower 1960s Financial investor 1990s New opportunities 2000s International investor Arendals Fossekompani was founded on 30 January 1896 to harness the forces in the Arendal watercourse system and transform them into electric power. We acquired rights to several waterfalls, including Bøylefossen and Flatenfossen. Norwegian industrial entrepreneur Sam Eyde was instrumental in the early years. Arendals Fossekompani gradu- ally built a substantial ﬁnancial capacity. At the end of the 1960s, the company changed its mission statement and built a portfolio of ﬁnancial investments in listed and unlisted companies. The construction of Bøylefoss Hydropower Plant started in 1911, in parallel with the establishment of new industry in Eydehavn. The ﬁrst electric power from Bøylefoss was delivered to Eydehavn in the summer of 1913. That same year, Arendals Fossekompani was listed at Oslo Børs. Deregulation of the Norwegian electricity market presented new market opportunities. Arendals Fossekompani played an active role and established a subsidiary, Markedskraft, as an independent provider of services in the Nordic and European wholesale electricity market. The growing demand for electricity for industrial purposes led to the development of Flatenfoss Hydropower Plant in 1927. The original plant was operational until it was replaced in 2009. The new millennium marked the start of the transformation of Arendals Fossekompani, from a local hydropower producer to an international investment company. A series of successful investments in Norwegian and international companies from the early 2000s till today, have contributed to the current portfolio of companies in forward-looking industries. 22 23 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Performance Arendals Fossekompani Group 26 Arendals Fossekompani Group Management 30 Volue 32 ENRX 34 NSSLGlobal 36 Tekna 38 AFK Vannkraft 40 Alytic 42 AFK Eiendom 44 Shareholder information 46 Reporting 100 years ago 48 24 25 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Group Head ofﬁce Arendal, Norway Chief Executive Ofﬁcer Benjamin Golding Employees 2,594 Chair Trond Westlie Countries 25 Arendals Fossekompani is a long-term industrial inves- tor that combines industrial, technological, and capital markets expertise to identify and develop opportunities for sustainable value creation. Our portfolio of companies employ over 2,500 professionals across 25 countries. In 2024, Arendals Fossekompani reported consoli- dated revenue of NOK 4,363 million (3,897 million) and operating proﬁt of NOK 394 million (444 million). Proﬁt from continuing operations amounted to -42 million (61 million). Ordinary proﬁt after tax amounted to NOK 2,244 million (-30 million), of which the Arendals Fossekompani shareholders’ share of the proﬁt was NOK 2,238 million (33 million). Including currency differences, changes in the value of available-for-sale ﬁnancial assets, minority interests, and other comprehensive income items, the Group’s total comprehensive income was NOK 2,380 million (60 million). Consolidated revenues in 2024 increased by 12% year- on-year, with the operating margin coming in at 9.0% (11.4%). The year was marked by record high results in portfolio companies NSSLGlobal and ENRX, along with top line growth and margin expansion on adjusted EBITDA level for Volue. Revenue and operating proﬁt from AFK Vannkraft was signiﬁcantly down from 2023 due to lower prices. Note that revenue growth for the Group in 2024 was positively impacted by a weaker Norwegian Krone, compared to 2023. Consolidated group operating cash ﬂow in 2024 amounted to NOK 743 million (-398 million). Arendals Fossekompani’s ﬁnancial position was signiﬁ- cantly strengthened in the 2024 and remains solid. The Parent company’s available cash on 31 December 2024 amounted to NOK 914 million (1,064 million). In addition, the company has undrawn credit facilities of NOK 1,985 million (1,132 million), securing available liquidity of NOK 2,899 million (2,196 million) at the end of 2024. The Net Interest-Bearing Debt (NIBD), excluding shareholder loans, was NOK -45 million (495 million) at the end of 2024. STRUCTURAL CHANGES IN THE PORTFOLIO IN 2024 Arendals Fossekompani, Advent International and Generation Investment Management, completed the voluntary tender offer for the shares in Volue on 28 October 2024. The joint strategic ownership is expected to signiﬁcantly accelerate Volue’s growth and value creation, directly beneﬁting Arendals Fossekompani's shareholders through our continued 40% stake in Volue. Additionally, the transaction, priced at NOK 42 per share, resulted in net cash proceeds of NOK 1 billion. In July, Arendals Fossekompani closed the sale of its 100% shareholding in Vergia to Swiss Life Asset Managers. In July, following Arendals Fossekompani's decision to cease its investment in the German battery company Commeo, the company ﬁled for insolvency. This resulted in the impairment of the goodwill of EUR 24.2 million (NOK 277 million) related to the acquisition of Commeo recognised in the consolidated group accounts. Capitalised R&D in Commeo was impaired with EUR 8.3 million (NOK 95 million). Arendals Fossekompani's parent company recognised impairment losses of EUR 81.3 million related to the entire book value of shareholding and shareholder debt. The discontinuation of Commeo and the divestment of Vergia were measures Arendals Fossekompani made to focus, de-risk and optimise the portfolio, while reducing exposure to capital intensive businesses in line with strategy. Financial ﬁgures for Volue, Commeo and Vergia in the Annual Report for 2024 are recognised as discontinued operations. When referring to group results and ﬁgures, this report will refer to results for continued operations, unless speciﬁed otherwise. See Financial Note 3 for further information. PORTFOLIO SUMMARY Volue Volue reported operating revenue of NOK 1,634 million (1,464 million), corresponding to a growth of 12%. Growth was driven by all segments, in particular the Energy segment. Volue’s Energy solutions are experi- encing strong demand driven by end-users need for more advanced software solutions to meet the growing complexity of the energy markets. Adjusted EBITDA amounted to NOK 362 million (267 million), correspond- ing to a margin of 22% (18%). Annual recurring reve- nue (ARR) grew by 19%, reaching NOK 1,175 million by year-end, while Software-as-a-service (SaaS) revenue showed 41% growth year-on-year. At the end of 2024, Volue acquired PowerBot GmbH, a leading algotrading software provider. The acquisition complements Volue’s existing trading solutions in Europe. ENRX ENRX reported operating revenue of EUR 164.6 million (157.6 million), up 5% from 2023. Growth was mainly driven by a strong North American market for the Heat division. The European and Asian markets saw ﬂat devel- opment in 2024, with delays in deliveries and invest- ments. Operating proﬁt came in at EUR 11.5 million (10.1 million), and 2024 represented the highest revenue and EBIT in the company’s history. Total order intake in 2024 was EUR 147 million (166 million). The reduced order intake was mainly related to a larger Charge project (EUR 13 million) awarded in 2023. FINANCIAL FIGURES (MNOK) 2024 2023 2022 Revenue and other income 4,363 3,897 4,587 EBITDA 607 611 726 Operating proﬁt 394 444 429 Operating margin 9% 11% 9% Earnings before tax (EBT) 227 456 426 Proﬁt (-loss), continuing operations -42 61 -33 Proﬁt (-loss) discontinued operations 2,286 -91 - Proﬁt (-loss) attributable to equity holders 2,238 33 6 Total comprehensive income 2,380 60 12 Operating cash ﬂow 743 -398 483 NIBD 54 1,015 -947 Equity 5,475 3,649 3,784 Equity ratio 61% 40% 48% SUSTAINABILITY KPIs 2024 2023 2022 Environment Scope 1 GHG (tCO 2 e) 1,794 1,858 1,744 Scope 2 GHG (location-based, tCO 2 e) 1,950 2,318 2,515 Scope 3 GHG (tCO 2 e) 1 677,009 - - Energy consumption (MWh) 27,623 27,111 26,516 Renewable energy consumption (location-based, % of total) 57% 53% 50% Social Female employees 19% 21% 20% Female members of Executive Management 24% 24% 14% Lost time injury frequency rate per million exposed hours 1.7 2.2 1.0 Sick leave rate 2% 3% 3% Voluntary turnover rate 2 10% - - Governance Signature of Code of Conduct 88% 69% 78% Internal training in Code of Conduct 76% 61% 45% Signature of Business Partner Code of Conduct 3 76% - - Convictions of violation of anti-corruption or anti-bribery laws 0 0 0 1. Only a limited set of Scope 3 categories were reported in previous years such that the total emissions in 2024 are not comparable to previously reported data. 2. Turnover rates for 2023 and 2022 include involuntary as well as voluntary departures. 3. Records signatures by partners assessed as high-risk. Data was collected on this KPI for the ﬁrst time in 2024. 26 27 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE NSSLGlobal NSSLGlobal reported revenue of GBP 101.9 million (91.8 million) in 2024, corresponding to a growth of 11%. Revenue growth was largely driven by increased government engineering projects, as well as continued high airtime revenue. NSSLGlobal reported a continued strong operating margin of 19% (18%), strengthened by higher utilisation of engineering resources and gross margin improvement. Revenue and operating proﬁt in 2024 was the highest in the company’s history. The company experienced solid sales throughout the year, including new maritime NAVCOM and IT security orders, governmental engineering orders, as well as defense contracts across Europe. Tekna Tekna reported operating revenue of CAD 37.2 million (40.9 million) in 2024, down 9% from 2023. The reduced top line was driven by a slow-down in order intake for Systems. Advanced Materials revenue grew by 7% 1 in 2024, driven largely by the aerospace & defense and medical segments, and increased sales of both small and large particle-sized material. Adjusted EBITDA came in at CAD -6.9 million (-4.1 million). Tekna continued to exe- cute on its comprehensive proﬁtability program in 2024, with recurring cost reductions expected to positively impact proﬁtability and cash generation in 2025. Tekna made further progress on qualifying its nano material for next-generation Multi-layer ceramic capacitors (MLCC) in 2024, and received its ﬁrst revenue-generating order for nano-nickel material samples. AFK Vannkraft AFK Vannkraft (Hydropower) reported revenue of NOK 363 million (511 million) in 2024. The average electricity price in the NO2 price area of EUR 50.1/MWh was signiﬁ- cantly down from 2023 (79.4/MWh). Production was high at 607 GWh (542 GWh), due to higher precipitation and inﬂow than normal for the watercourse. Operating proﬁt amounted to NOK 253 million (414 million) and earnings after tax amounted to NOK 97 million (119 million). The construction of Kilandsfoss hydropower plant proceeded according to schedule in 2024. Alytic Alytic reported revenue of NOK 67 million (46 million) in 2024, corresponding to a growth of 44%. Alytic contin- ued the development and commercialisation of its port- folio of data- and technology-driven companies during 2024, increasing ARR to NOK 55 million, up 31% YoY. Highlights for the portfolio included expansion of product offerings and strengthening of Management teams. AFK Eiendom AFK Eiendom reported revenue of NOK 295 million (18 million) and operating proﬁt of NOK 13 million (-10 million). 2024 was largely characterised by revenue recognition of the third stage of the Bryggebyen devel- opment project. In addition, AFK Eiendom was awarded the contract to build and lease new production facilities for Kitron. RESEARCH AND DEVELOPMENT In 2024 development costs of NOK 87 million were capitalised (NOK 77 million.) Other research and development costs in the Group are expensed as they arise and amounted to NOK 139 million in 2024 and NOK 80 million in 2023. SUSTAINABILITY Arendals Fossekompani Group reported a slight reduc- tion in overall emissions in 2024 compared to 2023. Total Scope 1 emissions decreased to 1,794 tCO2e (1,858 tCO2e). Scope 2 emissions decreased for the third con- secutive year to 1,950 tCO2e (2,318 tCO2e), while energy consumption saw a slight increase to 27,623 MWh (from 27,111 MWh). For the ﬁrst time in 2024, all relevant Scope 3 emissions were included, whereas previous years only accounted for business travel, waste, and fuel-and- energy-related activities. This resulted in Scope 3 emissions totalling 677,009 tCO2e. Arendals Fossekompani's portfolio contributes to multiple environmental objectives of the EU Taxonomy, including climate change mitigation, climate change adaptation, and the transition to a circular economy. The group's aligned turnover in 2024 was 8.3%, while the eli- gible, but not aligned turnover was 51.5%. Aligned CapEx was 0.9%, and eligible, non-aligned CapEx was 80.3%. Aligned OpEx was 11.5%, while eligible, not aligned OpEx was 69.1%. We recognise that Arendals Fossekompani's primary contribution going forward is enabling others in the transition, and the high percentage of eligible activi- ties reﬂects the signiﬁcant potential within our portfolio companies. The lost time injury frequency rate decreased to 1.7 in 2024, down from 2.2 in 2023. Employees remain our most valuable asset and enhancing their safety and well-being continue to be our top priority. The sick leave improved and was 2.0% in 2024, down from 2.7% in 2023. Female employees decreased from 21% in 2023 to 19% in 2024. Female members of C-suite positions (or Executive Management) were 24% at the end of year 2024, which remains unchanged from 2023. EVENTS AFTER THE CLOSE OF THE YEAR On 13 February, the Board of Directors decided to pay an ordinary cash dividend of NOK 1.00 per share for the fourth quarter of 2024. The dividend was paid on 28 February. On 18 March, Tekna announced the appointment of Mr. Claude Jean as the new CEO of Tekna Group, effec- tive April 28, 2025. Mr. Jean is an accomplished senior technology executive with a proven track record of building and leading world-class electronic manufac- turing services and R&D. He joins Tekna from Teledyne Technologies where he has held several leading posi- tions including Executive Vice President, Strategy & Partnership, Semiconductor and as General Manager of Teledyne DALSA. OUTLOOK There is ongoing uncertainty associated with geopolit- ical turmoil, supply chain constraints, inﬂation, interest rates, and the development of energy prices. Recent threats of tariffs and trade restrictions, in particular, have introduced high levels of unpredictability. Arendals Fossekompani and our portfolio companies will continue to closely monitor the geopolitical situation and imple- ment relevant measures if required. In this unpredictable environment, Arendals Fossekompani’s solid ﬁnancial position enables continued support of our portfolio companies, both in handling potential short-term challenges and also with continued investments to accelerate growth. In light of the market’s estimated power price trend for 2024 and forecasted production, revenue and operating proﬁt for AFK Vannkraft is expected to be lower in 2025 compared to 2024. Total revenue and operating proﬁt from Arendals Fossekompani Group, excluding AFK Vannkraft, is expected to be in line with 2024. Volue (associated company) expects revenue and operating proﬁt to be higher in 2025 compared to 2024. In an effort to meet our decarbonisation targets relating to our own operations, and to the extent possible, to our value chain, Arendals Fossekompani is developing a tran- sition plan. The plan will include decarbonisation levers for the Arendals Fossekompani Group collectively along with details on the resource allocation required to meet these targets. This is expected to be delivered by 2026 and will follow the upcoming EFRAG Implementation Guidance on transition plans. With a focus on the largest GHG emitters in Arendals Fossekompani Group, we will strengthen the accuracy and understanding of our Scope 3 upstream and down- stream emissions, as well as quantifying the potential ﬁnancial effects linked to signiﬁcant physical and transi- tion risks and climate-related opportunities. We have also adopted new and updated sustainabili- ty-related policies in 2024. To operationalise the new policies and meet their objectives, a new blueprint for responding to priority areas and our performance on our KPIs will be shared across the portfolio. SHARE PRICE On 31 December 2024, there was a total of 55,995,250 shares in the company, of which 1,058,832 were treasury shares. The share price on 31 December 2024 was NOK 142.4, compared to NOK 164.8 on 31 December 2023, corresponding to a decrease of 14%. When including direct yield (dividend payouts) in the same period, total decrease in shareholder value was 11%. Arendals Fossekompani’s total market capitalisation was NOK 8 billion at year-end. Compounded annual return to AFK shareholders was 9% (16% including dividends) in the period December 2014 to December 2024. 1. Adjusted for Joint Venture service revenues 28 29 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Group Management Combining industrial, technological and capital markets expertise, Arendals Fossekompani’s Group Management identiﬁes and develops opportunities for sustainable value creation. As an active owner of our portfolio com- panies, we support management in target setting, strat- egy development, performance management, M&A and ﬁnancing, and work to build strong boards, management teams and leaders to ensure long-term sustainable value creation. In every investment, we have a long-term view of our objectives. We retain ownership of our portfolio companies as long as we are the best owner, ensuring long-term value and stability. Arendals Fossekompani has an attractive portfolio in industries such as B2B software and analytics, satellite communications, induc- tion technology, industrial 3D printing, property, and hydropower. Our companies are both listed and privately owned, and Arendals Fossekompani is predominantly the majority owner. 2024 IN BRIEF (Figures in parentheses refer to the previous year) In 2024, Arendals Fossekompani Group Management reported operating expenses of NOK 87 million (84 million). The operating proﬁt was NOK -81 million (-78 million). Net proﬁt for the year was NOK 2,325 million (92 million). The net proﬁt in 2024 was mainly driven by recognition of a ﬁnancial gain resulting from the Volue transaction (NOK 3.3 billion), partly offset by an impair- ment loss (NOK 1 billion) related to the battery company Commeo. Other items impacting net proﬁt in 2024 were dividend payments from portfolio companies and inter- est income on intercompany loans. Operating cash ﬂow in Arendals Fossekompani parent company in 2024 amounted to NOK -72 million (-67 million). EBITDA in 2024 amounted to NOK 188 million (349 million), of which the deviation to operating cash ﬂow primarily related to taxes paid of NOK -256 million (-400 million). The reduction in ownership in Volue from 60% to 40% resulted in a net cash proceeds of NOK 1,008 million recognised as cash ﬂow from investments. Arendals Fossekompani parent company repaid long- term borrowings totaling NOK 876 million in 2024. Arendals Fossekompani’s ﬁnancial position was signiﬁ- cantly strengthened in 2024 and remains solid. The com- pany’s available cash on 31 December 2024 amounted to NOK 914 million (1,064 million). In addition, the company has undrawn credit facilities of NOK 1,985 million (1,132 million), securing available liquidity of NOK 2,899 million (2,196 million) at the end of 2024. The Net Interest Bearing Debt (NIBD), excluding shareholder loans, was NOK -45 million (495 million) at the end of 2024. STRUCTURAL CHANGES IN THE PORTFOLIO IN 2024 Arendals Fossekompani, Advent International and Generation Investment Management, completed the voluntary tender offer for the shares in Volue on 28 October 2024. Arendals Fossekompani, Advent and Generation bring highly complementary expertise to a long-term partnership, ensuring continuity and pres- ervation of established company values, while simulta- neously integrating fresh and innovative perspectives. The company is well positioned for further growth, both organically and through acquisitions. The joint strategic ownership is expected to signiﬁcantly accelerate Volue’s growth and value creation, directly beneﬁting Arendals Fossekompani's shareholders through our continued 40% stake in the company. Additionally, the transaction, priced at NOK 42 per share, resulted in net cash proceeds of NOK 1 billion. In July, Arendals Fossekompani closed the sale of Vergia to Swiss Life Asset Managers. At the time of the divest- ment, the Vergia portfolio comprised three ownership positions: 48.1% ownership of offshore wind energy developer Seagust, 47.9% ownership of green ammo- nia company North Ammonia, and 30.4% ownership of Power-to-X company HydePoint. In July, following Arendals Fossekompani's decision to cease its investment in the German battery company Commeo, the company ﬁled for insolvency. The discon- tinuation of Commeo and the divestment of Vergia were measures Arendals Fossekompani have taken to focus, de-risk and optimise the portfolio, while reducing expo- sure to capital intensive businesses in line with strategy. Head ofﬁce Arendal, Norway Chief Executive Ofﬁcer Benjamin Golding Employees 20 Chair Trond Westlie Countries 1 Arendals Fossekompani Group Management employs 20 people at the head ofﬁce in Arendal. The team focuses on identiﬁcation and development of new sustainable business opportunities, active ownership of our portfolio companies and management of ﬁnancial investments. FINANCIAL FIGURES (MNOK) 2024 2023 2022 Revenue and other income 17 13 23 EBITDA -75 -75 -82 Operating proﬁt (EBIT) -81 -78 -86 Operating margin -463% -616% -375% Earnings before tax (EBT) 2,307 97 461 Provision for income tax -17 5 5 Earnings after tax (EAT) 2,325 92 456 NIBD -45 495 -430 Equity 4,645 2,320 2,228 Equity ratio 83% 59% 74% SUSTAINABILITY KPIs 2024 2023 2022 Environment Scope 1 GHG (tCO 2 e) 0 0 0 Scope 2 GHG (location-based, tCO 2 e) 0.6 1.8 0.3 Scope 3 GHG (tCO 2 e) 1 622 - - Energy consumption (MWh) 89 90 32 Renewable energy consumption (location-based, % of total) 96% 96% 94% Social Female employees 50% 38% 38% Female members of Executive Management 33% 33% 33% Lost time injury frequency rate per million exposed hours 0 0 0 Sick leave rate 2% 3% 3% Voluntary turnover rate 2 5% - - Governance Signature of Code of Conduct 100% 100% 100% Internal training in Code of Conduct 100% 100% 100% Signature of Business Partner Code of Conduct 3 - - - Convictions of violation of anti-corruption or anti-bribery laws 0 0 0 1. Only a limited set of Scope 3 categories were reported in previous years such that the total emissions in 2024 are not comparable to previously reported data. 2. Turnover rates for 2023 and 2022 include involuntary as well as voluntary departures. 3. Records signatures by partners assessed as high-risk. Data was collected on this KPI for the ﬁrst time in 2024. 30 31 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Portfolio company 2024 IN BRIEF (Figures in parentheses refer to the previous year) Volue reported operating revenue of NOK 1,634 million (1,464 million) in 2024. Adjusted EBITDA amounted to NOK 362 million (267 million), corresponding to an adjusted EBITDA margin of 22% (18%). The operating proﬁt was NOK -24 million (87 million), while the ordinary proﬁt before tax was NOK -50 million (70 million). Operating revenue grew by 12% across all segments, driven primarily by the Energy segment, which achieved a growth of 15%. Volue’s Energy division has gained high market traction, driven by increased demand for advanced services and enhanced automation, address- ing the evolving complexity, and more granular time resolutions in the power markets. Additionally, The Power Grid and Infrastructure segments saw revenue growth of 5% and 8%, respectively. Annual recurring revenue (ARR) grew by 19% from 2023, reaching NOK 1 175 million by year-end. Software-as- a-Service (SaaS) revenue showed a 41% growth year- on-year, with SaaS accounting for 34% (27%) of total revenue in 2024. In October, Arendals Fossekompani, Advent International and Generation Management completed the acquisition and delisting of Volue. The joint strategic ownership is expected to signiﬁcantly accelerate Volue's growth and value creation. Following the delisting from Oslo Stock Exchange and change in ownership structure, a new strategy was outlined for the company, with a clear focus on which markets to target and what products to scale upon. As a result of this process, a signiﬁcant restructuring process was conducted, with related non-recurring restructuring costs booked in the fourth quarter of 2024. The operat- ing proﬁt in 2024 was further impacted by non-recurring costs related the delisting process and stock options. The Energy segment generated 15% growth in reve- nue in 2024, driven mainly by solid sales of insight and intraday trading products, both to new customers and through upselling to existing customers. Growth was particularly driven by the Energy software product stack, with optimalisation solutions as core. Volue sees signiﬁcant growth driven by new asset owners entering the power production market. These players will typically be smaller in size, operate leaner organisations and lack the capabilities to monetise assets continously. To support them, Volue Market Services provides software an added service, enabling sophisticated market participation through optimali- sation-as-a-service and trading-as-a-service offerings, complemented by 24/7 asset monitoring. Insight by Volue announced the integration of a cut- ting-edge AI-based weather forecast into the weath- er-driven fundamental models as a new product in 2024. This innovation enhances the accuracy and utility of Volue’s wind power predictions, offering signiﬁcant value to power market actors relying on precise weather insights for energy forecasting and decision-making. The Power Grid segment continued its strong focus on expansion in the Nordic market, with a solid growth of 12% in recurring revenues. Large ongoing investments for the grid companies lead to strong market demands, and Volue sees good growth opportunities in both the Nordic home market, as well as further expansion out- side the Nordics. The Infrastructure segment continued the strong development in 2024, in line with previous years, with strong focus on the Nordic homemarkets. A growing customer base, now counting 1 130 customers, lays out a solid foundation for continuing the further expansions of SaaS offerings. The Infrastructure segment now have customers in eight countries. With no marketing activities outside the home market, this is a testament to the inherent business value of the products for the construction industry. At the end of Q4, Volue acquired PowerBot GmbH, a leading algotrading software provider. The acquisition of PowerBot’s scalable and open platform comple- ments Volue’s strong existing enterprise-grade trading solutions by addressing the needs of a growing class of quantitative power traders across Europe. PowerBot is a certiﬁed Independent Software Vendor (ISV) at EPEX Spot, Nord Pool and various other European energy exchanges. PowerBot will beneﬁt from Volue’s resources and expertise to further accelerate its development and improve its customer experience over the coming years. Volue’s commercial teams will bring the PowerBot platform to existing customers across its portfolio. SUSTAINABILITY In 2024, Scope 1 emissions remained consistent with the previous year at 18 tCO2e, while Scope 2 emissions decreased to 173 tCO2e (224 tCO2e). All relevant Scope 3 categories were included for the ﬁrst time at 698 tCO2e. OUTLOOK Volue has prioritised strategic investments in its SaaS platform and expansion into new markets in an effort to capture market opportunities arising from the green transition. Due to the aforementioned restructuring in 2024, the company enters 2025 with a lower cost base. Going forward, Volue expects organic growth around 15%, improvements in Cash EBITDA and a continued active M&A agenda. Head ofﬁce Oslo, Norway Countries 12 Ownership 40% Chief Executive Ofﬁcer Trond Straume Employees 822 Chair Peter Michael Daffern Volue is a market leader in technologies and services that power the green transition. Based on 50 years of experience, Volue provides innovative solutions, systems and insights to industries critical to society. Over 800 employees work with more than 2,500 customers across energy, power grid, water and infrastructure projects that ensure a sustainable, ﬂexible and reliable future. The company is head- quartered in Oslo, Norway and active in 40+ countries. FINANCIAL FIGURES (MNOK) 2024 2023 2022 Operating revenue 1,634 1,464 1,217 EBITDA 164 215 147 Adjusted EBITDA 362 267 203 Operating proﬁt -24 87 40 Operating margin -1% 6% 3% Earnings before tax (EBT) -50 70 36 Net proﬁt -43 43 19 Operating cash ﬂow 227 -97 214 NIBD 342 382 -330 Equity 6,703 850 809 Equity ratio 82% 40% 43% Cash EBITDA 1 134.5 42.2 46.9 SUSTAINABILITY KPIs 2024 2023 2022 Environment Scope 1 GHG (tCO 2 e) 18 18 17 Scope 2 GHG (location-based, tCO 2 e) 173 224 155 Scope 3 GHG (tCO 2 e) 2 698 - - Energy consumption (MWh) 2,238 2,405 2,112 Renewable energy consumption (location-based, % of total) 67% 71% 65% Social Female employees 24% 23% 23% Female members of Executive Management 20% 17% 10% Lost time injury frequency rate per million exposed hours 0 0 0 Sick leave rate 3% 3% 3% Voluntary turnover rate 3 8% - - Governance Signature of Code of Conduct 100% 89% 97% Internal training in Code of Conduct 0% 89% 0% Signature of Business Partner Code of Conduct 4 23% - - Convictions of violation of anti-corruption or anti-bribery laws 0 0 0 1. Adjusted EBITDA less capitalised R&D and leasing costs. 2. Only a limited set of Scope 3 categories were reported in previous years such that the total emissions in 2024 are not comparable to previously reported data. 3. Turnover rates for 2023 and 2022 include involuntary as well as voluntary departures. 4. Records signatures by partners assessed as high-risk. Data was collected on this KPI for the ﬁrst time in 2024. 32 33 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE 2024 IN BRIEF (Figures in parentheses refer to the previous year) ENRX reported operating revenue of EUR 164.6 million (157.6 million) in 2024. EBITDA amounted to EUR 19.1 million (17.4 million). The operating proﬁt was EUR 11.5 million (10.1 million), while the ordinary proﬁt before tax was EUR 4.6 million (6.3 million). Revenue growth of 4.5% during 2024 was driven by a strong market in the Heat division, and a smaller revenue contribution from the Charge division. In geographical terms, the company saw solid growth in North America, while the growth in Europe and Asia was ﬂat due to delayed deliveries and slower customer decision-making processes. 2024 represented the highest revenue and EBIT in the company’s history. Operating margin for the year was 7.0% (6.4%). The Heat division contributed with reve- nue of EUR 159.8 million in 2024 (153.2 million) and an improved operating margin of 10% (8%). The Charge division, which develops induction charging solutions, had a negative EBIT contribution of EUR -3.9 million (-1.5 million) in line with plan. The order intake in 2024 was impacted by postponed decisions from customers and the geopolitical situation leading to stagnation in many markets. Order intake ended at EUR 147 million (EUR 166.5 million), of which most of the shortfall vs. last year was explained by the contract awarded in 2023 for construction of the electri- ﬁed roadway in Florida, USA (EUR 12.7 million). The order intake was geographically split between Europe EUR 55.5 million, Asia EUR 52.7 million and North America EUR 38.9 million. The order backlog of EUR 67 million (86 million) per year- end was reduced during the year due to high deliveries, in combination with reduced order intake. SUSTAINABILITY In 2024, ENRX's Scope 1 GHG emissions were 921 tCO2e (957 tCO2e) while Scope 2 emissions decreased by 12%. This reduction was driven by the installation of solar panels at sites in Poland and India. Additionally, ENRX reported all relevant Scope 3 activities for the ﬁrst time, recording 631,680 tCO2e. According to the EU Taxonomy mapping, the share of Taxonomy-eligible, not aligned turnover for ENRX was 82%, an increase from 74% in 2023. Taxonomy eligible, not aligned CapEx was 88%, and eligible, not aligned OpEx was 78.8%. The majority of the turnover comes from manufacturing of induction power generators. The activity enables customers to lower own emissions in production processes and enable the manufacturing of low carbon technologies. ENRX also contributes to the circular economy objective through its sales of spare parts. ENRX currently does not meet all alignment crite- ria. The reduction in voluntary turnover rate 12% (18%) was due to restructuring in Germany in 2023 which had no equivalent in 2024. OUTLOOK The market for heating products is expected to remain somewhat uncertain in the coming months as customer decision-making processes take longer and orders are postponed. However, ENRX expects order intake largely in line with 2024. ENRX expects revenue for 2025 to be in line with 2024. Operating proﬁt is expected to improve due to the ongo- ing proﬁtability program and focus on cost control. The Charge division will continue its work on the Dynamic Road project in North America in 2025. The division will also introduce new products within the light industrial segment. Electriﬁcation is expected to see growth over the next decade. The global trend is a shift from gas and ﬂame heating to more energy-efﬁcient and eco-friendly alternatives, such as induction heating. To remain at the forefront of induction technology, ENRX continues its R&D efforts. For several years, ENRX has been the leading supplier of equipment to the renewable power sector. The acquisition of IPT Technology in 2022 and establishment of the Charge division opens a growing and potentially large market within wireless charging solutions, which is expected to generate long-term revenue and cost synergies to further improve the company’s operational leverage. Portfolio company Head ofﬁce Skien, Norway Countries 15 Ownership 95% Chief Executive Ofﬁcer Bjørn E. Petersen Employees 1,158 Chair Benjamin Golding Leveraging decades of experience, ENRX combines global market leadership for industrial induction heating systems (Heat) with leading technology in the high- growth market for wireless induction charging solutions (Charge). Industries served by ENRX include automotive, renewable energy/wind energy, pipe fabrication, electronics, cable and mechanical engineering. The company has operations in 15 countries. FINANCIAL FIGURES (MNOK) 2024 2023 2022 Operating revenue 1,914 1,800 1,338 EBITDA 222 198 75 Operating proﬁt 134 116 -3 Operating margin 7% 6% 0% Earnings before tax (EBT) 53 71 -20 Net proﬁt 9 28 -34 Operating cash ﬂow 73 4 46 NIBD 1,054 777 558 Equity 509 417 384 Equity ratio 21% 21% 22% SUSTAINABILITY KPIs 2024 2023 2022 Environment Scope 1 GHG (tCO 2 e) 921 957 895 Scope 2 GHG (location-based, tCO 2 e) 1,572 1,788 2,162 Scope 3 GHG (tCO 2 e) 1 631,680 - - Energy consumption (MWh) 9,629 9,666 10,160 Renewable energy consumption (location-based, % of total) 35% 30% 29% Social Female employees 15% 15% 16% Female members of Executive Management 13% 14% 14% Lost time injury frequency rate per million exposed hours 2.4 3.1 1.1 Sick leave rate 3% 4% 3% Voluntary turnover rate 2 9% - - Governance Signature of Code of Conduct 84% 48% 65% Internal training in Code of Conduct 83% 44% 78% Signature of Business Partner Code of Conduct 3 100% - - Convictions of violation of anti-corruption or anti-bribery laws 0 0 0 1. Only a limited set of Scope 3 categories were reported in previous years such that the total emissions in 2024 are not comparable to previously reported data. 2. Turnover rates for 2023 and 2022 include involuntary as well as voluntary departures. 3. Records signatures by partners assessed as high-risk. Data was collected on this KPI for the ﬁrst time in 2024. 34 35 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE 2024 IN BRIEF (Figures in parentheses refer to the previous year) NSSLGlobal reported revenues of GBP 101.9 million (91.8 million) in 2024. EBITDA amounted to GBP 21.5 million (17.6 million). Operating proﬁt was GBP 19.2 million (16.1 million), while the ordinary proﬁt after tax was GBP 14.7 million (12.5 million). Revenue and operating proﬁt in 2024 was the highest in the company’s history. Revenue growth in 2024 was largely driven by increased government engineering projects, as well as continued high airtime related to operational activity caused by events in Ukraine and in the Middle East. The largest customer segment for NSSLGlobal is the Government & Defense sector, where revenue increased by 27% in 2024 to GBP 65 million. NSSLGlobal has long-standing customer relationships with several governmental institutions, including the UK Ministery of Defence and the German Armed Forces, and constantly works to further reﬁne their offerings to these customers. Operating margin for the year increased slightly to 19% (18%) and was largely related to a small improvement in gross margin together with higher utilization of internal engineering resources, which reduced operating costs. The company experienced healthy sales throughout the year, including new maritime NAVCOM and ITSM (IT security management) orders, governmental engineering orders, as well as defence contracts across Europe. NSSLGlobal remains a signiﬁcant service provider to the UK Ministry of Defence and German Armed Forces through a number of long-term framework agreements and recent contract and project wins for both commercial communication, ICT and entertainment services. In early 2024, NSSLGlobal extended its largest Commercial Satellite Contract with the UK MOD for a further 5 years through the Babcock Skynet Service Delivery Wrap (SDW) umbrella contract. NSSLGlobal also rolled out a number of multi-million European government engineering projects, including a large EUR 15 million engineering project for the German Armed Forces. In addition, the company won a number of new multi-million governmental projects in 2024, providing a strong order backlog into 2025 and 2026. On the Commercial maritime side, NSSLGlobal contin- ued to roll out its FusionIPLeo service to existing and new clients. This includes a hybrid of the best of GEO, LTE and LEO based satellite constellations. It combines the trusted beneﬁts of a global, high availability GEO service with the low latency and high capacity from LTE and LEO satellites. At the core of this service is NSSLGlobal’s Smart@Sea platform providing secure and seamless solutions to the end user, as well as additional cyber, Crew entertainment, IT and Management functionality. SUSTAINABILITY In 2024, NSSLGlobal saw a slight reduction in Scope 1 and Scope 2 emissions. Scope 1 emissions were 201 tCO2e (from 208 tCO2e), and Scope 2 emissions were 189 tCO2e (from 201 tCO2e). Despite the increase in company activities, locations, and employees, this reﬂects positive progress. Additionally, NSSLGlobal included all relevant Scope 3 activities for the ﬁrst time, totalling 8,051 tCO2e. The share of Taxonomy-eligible, not aligned turnover for NSSLGlobal was 4.5%. Eligible, not aligned CapEx was 70.9%, while eligible, non-aligned OpEx was 3.1%. OUTLOOK NSSLGlobal expects 2025 revenue and operating proﬁt to be lower than in 2024, due to expected reduced event trafﬁc, and the completion of a large project in 2024, which will not recur in 2025. Depending on the developments in the geopolitical land- scape, including the situation in Ukraine and the Middle East, and the increased demand for European spending on defence, NSSLGlobal could see signiﬁcant variability to its forecasted event trafﬁc in 2025. NSSLGlobal also holds a solid pipeline for Project Sales particularly in the governmental market, but revenue for these are unlikely to be seen in 2025 unless fast tracked by the respective government. Portfolio company Head ofﬁce London, UK Countries 9 Ownership 80% Chief Executive Ofﬁcer Sally-Anne Ray Employees 249 Chair Arild Nysæther NSSLGlobal is an independent provider of cyber secure satellite and mobile communications and IT support that delivers high-quality voice and data services across the globe, regardless of location or terrain. NSSLGlobal’s activ- ities are divided into four main areas: Airtime, Projects, Hardware and Service. Its main customers are within the maritime segment, the military and government sector, large international corporations and the energy sector. The revenue model is to a large degree based on multi- year subscription and support contracts, thereby securing a signiﬁcant degree of recurring revenues. FINANCIAL FIGURES (MNOK) 2024 2023 2022 Revenue and other income 1,400 1,206 1,042 EBITDA 295 231 255 Operating proﬁt 263 211 209 Operating margin 19% 18% 20% Earnings before tax (EBT) 277 209 236 Net proﬁt 202 164 178 Operating cash ﬂow 334 122 154 NIBD -474 -346 -340 Equity 725 608 524 Equity ratio 58% 57% 57% SUSTAINABILITY KPIs 2024 2023 2022 Environment Scope 1 GHG (tCO 2 e) 201 208 180 Scope 2 GHG (location-based, tCO 2 e) 189 201 120 Scope 3 GHG (tCO 2 e) 1 8,051 - - Energy consumption (MWh) 2,072 2,113 1,563 Renewable energy consumption (location-based, % of total) 25% 23% 16% Social Female employees 24% 27% 22% Female members of Executive Management 50% 40% 40% Lost time injury frequency rate per million exposed hours 0 0 0 Sick leave rate 3% 1% 2% Voluntary turnover rate 2 11% - - Governance Signature of Code of Conduct 100% 100% 100% Internal training in Code of Conduct 100% 100% 100% Signature of Business Partner Code of Conduct 3 - - - Convictions of violation of anti-corruption or anti-bribery laws 0 0 0 1. Only a limited set of Scope 3 categories were reported in previous years such that the total emissions in 2024 are not comparable to previously reported data. 2. Turnover rates for 2023 and 2022 include involuntary as well as voluntary departures. 3. Records signatures by partners assessed as high-risk. Data was collected on this KPI for the ﬁrst time in 2024. 36 37 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE 2024 IN BRIEF (Figures in parentheses refer to the previous year) Tekna reported operating revenue of CAD 37.2 million (40.9 million) in 2024. Adjusted EBITDA amounted to negative CAD 6.9 million (-4.1 million). Total order backlog per year-end amounted to CAD 16.7 million (24.0 million). In 2024, Tekna mainly focused on enhancing proﬁtability and improving cash ﬂow to navigate challenging mac- ro-economic circumstances. Revenues in Advanced Materials increased by 3.2% to CAD 26.5 million (25.5 million), representing 72% of total operating revenue. Adjusted for service revenues of CAD 1 million charged by Tekna to the discontinued joint venture in 2023, the growth was 7%. Throughout 2024, Tekna saw rising demand for its materials for Additive Manufacturing in customer segments such as Aerospace & Defense and Medical implants. Growth was supported by demand for both small and large parti- cle-sized material, valorising a greater portion of the pro- duction yield. Reduced sales to 3D printer manufacturers had an adverse impact on growth during the year. After a record year in 2023, the Systems segment saw a signiﬁcant slow-down in order intake in 2024. Revenue in 2024 amounted to CAD 10.7 million (15.2 million). Contribution margin for Systems for the year was stable at 63%. Despite lower Systems sales in 2024, the PlasmaSonic pipeline saw steady progress during the year. In April 2024, Tekna received its ﬁrst revenue-generating order for nano nickel material samples to develop metal paste for multi-layer ceramic capacitors (MLCC). This order highlights Tekna’s role in advancing next-genera- tion electronic components and continued commitment to expanding its offering. Tekna continued to execute on its comprehensive prof- itability improvement program in 2024, which started in 2022. Efforts focused on creating a leaner operation, reducing operating costs and further improving cash ﬂow. Most of the cost reductions and initiatives imple- mented in 2024 are recurring, with expected positive impact on proﬁtability and cash ﬂow in 2025. The net working capital improved to CAD 14.5 million by year-end 2025 (19.6), further contributing to cash ﬂow. In June, the Federal Court of Canada ruled in favor of Tekna in an intellectual property case concerning competing patents rights to produce titanium powder in Canada. A Notice of appeal was submitted in September by AP&C. In December, AP&C paid Tekna CAD 2.9 million as compensation for litigation cost. SUSTAINABILITY In 2024, Tekna's Scope 1 GHG emissions were 596 tCO2e (589 tCO2e), while Scope 2 emissions decreased to 14 tCO2e (30 tCO2e), due to increased renewable energy use in Canada and reduced nuclear energy use in France. Scope 3 GHG emissions were 27,730 tCO2e in 2024, which was the ﬁrst year that Tekna included all relevant activities. 89.9% of Tekna’s turnover is eligible under the EU Taxonomy, where majority of the turnover is from production of additive material powders aimed at enhancing resource efﬁciency across the value chain. Currently, Tekna does not have a life cycle GHG emission savings analysis available, and therefore the activity is not aligned with the EU Taxonomy. In 2024 eligible, non-aligned CapEx was 98.2%, and eligible, non-aligned OpEx was 100%. Female representation in C-suite management rose to 33% (29%), and workplace safety improved with a reduced injury frequency rate of 5.8 (8.1). OUTLOOK The top priority moving forward is to maintain strong focus on proﬁtability and capital discipline. Tekna goes into 2025 with a lower cost base resulting from proﬁt- ability measures implemented in 2024. Tekna remains focused on its core business in Advanced Materials, which continues to demonstrate resilience and growth. Tekna’s position in the additive manufactur- ing industry remains strong, with projected double digit market growth. Growth opportunities are driven globally by the transition towards more efﬁcient manufacturing technology and products, as well as reducing supply chain constraints by reshoring manufacturing across multiple industries. The company’s existing machine base is projected to adequately meet the anticipated growth in demand for Advanced Materials until the end of 2027. Tekna is working continuously on improving machine produc- tivity to increase capacity of the existing machine base. Higher productivity helps shorten delivery times and, in turn, positively impact sales. As a result, the company will have a minimal need for capital expenditures for its cur- rent operations in the coming years, estimated at CAD 2-3 million per annum, excluding leases under IFRS 16. Tekna has a strong pipeline of potential orders for Systems, with an acceleration of interest in PlasmaSonic wind tunnel solutions that are pivotal to the development of hypersonic ﬂight and spacecrafts. Tekna will continue its efforts in the development of nano nickel particles for MLCC applications in close coopera- tion with industry leading customers. Concerning possible tariffs Tekna is following devel- opments closely and adjusting mitigation activities accordingly. Portfolio company Head ofﬁce Sherbrooke, Canada Countries 5 Ownership 69.5% Chief Executive Ofﬁcer Luc Dionne Employees 185 Chair Dag Teigland Tekna is a world-leading provider of advanced materials and plasma systems to several industries. The company produces high-purity metal powders for applications such as 3D printing in the aerospace, medical and consumer electronics sectors, as well as optimized induction plasma systems for industrial research and production. FINANCIAL FIGURES (MNOK) 2024 2023 2022 Operating revenue 292 320 199 EBITDA -31 -64 -124 Adjusted EBITDA -54 -32 -95 Operating proﬁt -63 -97 -153 Operating margin -22% -30% -77% Earnings before tax (EBT) -79 -107 -166 Net proﬁt -85 -118 -167 Operating cash ﬂow -1 -88 -145 NIBD 172 125 -28 Equity 209 294 389 Equity ratio 36% 50% 72% SUSTAINABILITY KPIs 2024 2023 2022 Environment Scope 1 GHG (tCO 2 e) 596 589 585 Scope 2 GHG (location-based, tCO 2 e) 14 30 34 Scope 3 GHG (tCO 2 e) 1 27,730 - - Energy consumption (MWh) 12,750 11,563 11,508 Renewable energy consumption (location-based, % of total) 77% 72% 69% Social Female employees 26% 27% 26% Female members of Executive Management 33% 29% 29% Lost time injury frequency rate per million exposed hours 5.8 8.1 2.7 Sick leave rate 3% 3% 3% Voluntary turnover rate 2 15% - - Governance Signature of Code of Conduct 100% 78% 91% Internal training in Code of Conduct 0% 0% 0% Signature of Business Partner Code of Conduct 3 100% - - Convictions of violation of anti-corruption or anti-bribery laws 0 0 0 1. Only a limited set of Scope 3 categories were reported in previous years such that the total emissions in 2024 are not comparable to previously reported data. 2. Turnover rates for 2023 and 2022 include involuntary as well as voluntary departures. 3. Records signatures by partners assessed as high-risk. Data was collected on this KPI for the ﬁrst time in 2024. 38 39 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Portfolio company Head ofﬁce Froland, Norway Countries 1 Ownership 100% Operating Manager Jan Roald Evensen Employees 16 Chair Trond Westlie AFK Vannkraft generates power at two locations in the Arendal watercourse. The Bøylefoss and Flatenfoss hydropower plants produce on average more than 500 GWh annually. AFK Vannkraft has a deﬁned strategy of selling hydropower production in the day-ahead (spot) market. AFK Vannkraft reported revenue of NOK 363 million (511 million) in 2024. EBITDA amounted to NOK 261 million (425 million) and operating proﬁt amunted to NOK 253 million (414 million). Provision for income tax amounted to NOK 156 million (294 million) in 2024. Overall, electricity prices in 2024 were down from 2023, with an average price in the NO2 price area of 50.1 EUR/ MWh (79.4 EUR/MWh). However, electricity prices in Southern Norway, particularly in NO2, were character- ised by signiﬁcant ﬂuctuations during 2024. High-price periods were driven by colder than expected weather and low wind production in Europe, while low-price periods were impacted by higher hydro reservoir levels, along with high wind production in Europe and lower price levels for coal, gas, and CO2. These ﬂuctuations highlight how electricity prices are highly sensitive to factors such as weather conditions, European power production, and demand. AFK Vannkraft has a deﬁned strategy of selling hydropower production in the day- ahead (spot) market, and as such, is exposed to these ﬂuctuations. Power generation increased to 606.7 GWh (542 GWh), driven by higher precipitation and inﬂow than normal for the watercourse. The accumulated amount of snow and the reservoir levels in the watercourse were higher than normal during the year. The construction of Kilandsfoss hydropower plant is pro- ceeding according to schedule. Kilandsfoss hydropower plant will produce an annual average of 38 GWh and is located in Nidelva between our two hydropower plants, Bøylefoss and Flatenfoss. Kilandsfoss hydropower plant is scheduled to start electricity production in 2026. The rehabilitation of the Bøylefoss hydropower plant building exterior started in 2023, with 60% of the reha- bilitation completed per year-end 2024. The rehabilita- tion of the exterior will continue in 2025 and is expected to be ﬁnalised in 2026. SUSTAINABILITY In 2024, the Scope 1 emissions decreased slightly at 22 tCO2e (27 tCO2e). The Scope 2 emissions remained the same as in 2023 at 1.3 tCO2e (1.3 tCO2e). AFK Vannkraft included all relevant Scope 3 activities for the ﬁrst time, totalling 814 tCO2e. AFK Vannkraft’s main economic activity, electricity generation from hydropower, is aligned with the EU Taxonomy, resulting in 99.8% of the turnover being aligned. Taxonomy-aligned CapEx was 45%, while eligi- ble, not aligned CapEx was 16%. Aligned OpEx was 67.4% and eligible, not aligned OpEx 26.8%. OUTLOOK The market’s estimated power price trends for 2025 are expected to be comparable to 2024. Actual energy prices depend on many factors, including hydrological balance, oil and gas prices, weather conditions, tempera- tures, and more. Production for 2025 is expected to be lower than that of 2024. Production in 2024 was excep- tionally high, while 2025 is expected to be closer to the average. The rehabilitation on the exterior of the Bøylefoss hydropower plant building is expected to be complete in 2026. Further investments in the coming years include regulatory required upgrades of the dam facilities and reinvestments in turbines at the Bøylefoss power plant. 100 200 300 400 500 600 2.5 5.0 7.5 10.0 12.5 15.0 12/19 04/20 08/20 12/20 04/21 08/21 12/21 04/22 08/22 12/22 04/23 08/23 12/23 04/24 08/24 12/24 POWER PRICE & POWER GENERATION Power generation (GWh/Week) Power price (EUR/MWh) Power price in the NO2 price area and power generation for Arendals Fossekompani per week for the period 31/12/2019 – 31/12/2024. FINANCIAL FIGURES (MNOK) 2024 2023 2022 Revenue and other income 363 511 606 EBITDA 261 425 545 Operating proﬁt (EBIT) 253 414 535 Operating margin 70% 81% 88% Earnings before tax (EBT) 253 414 535 Provision for income tax 156 294 387 Earnings after tax (EAT) 97 119 148 SUSTAINABILITY KPIs 2024 2023 2022 Environment Scope 1 GHG (tCO 2 e) 22 27 20 Scope 2 GHG (location-based, tCO 2 e) 1.3 1.3 1.9 Scope 3 GHG (tCO 2 e) 1 814 - - Energy consumption (MWh) 269 322 357 Renewable energy consumption (location-based, % of total) 68% 66% 76% Social Female employees 13% 12% 13% Female members of Executive Management 0% 0% 0% Lost time injury frequency rate per million exposed hours 0 0 0 Sick leave rate 2% 4% 5% Voluntary turnover rate 2 0% 0% 0% Governance Signature of Code of Conduct 100% 100% 100% Internal training in Code of Conduct 81% 100% 100% Signature of Business Partner Code of Conduct 3 - - - Convictions of violation of anti-corruption or anti-bribery laws 0 0 0 1. Only a limited set of Scope 3 categories were reported in previous years such that the total emissions in 2024 are not comparable to previously reported data. 2. Turnover rates for 2023 and 2022 include involuntary as well as voluntary departures. 3. Records signatures by partners assessed as high-risk. Data was collected on this KPI for the ﬁrst time in 2024. 40 41 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Portfolio company Head ofﬁce Arendal, Norway Countries 6 Ownership 96% Chief Executive Ofﬁcer Espen Zachariassen Employees 119 Chair Lars Peder Fensli Alytic acts as a growth catalyst for future-oriented com- panies and works to establish leading businesses within their respective industries. The Alytic investment team collaborates closely with their portfolio companies to drive value through strategic development, leadership support, HR and talent acquisition, and by leveraging data science and technology. The Alytic portfolio includes: Kontali, a world-leading aquaculture data and analysis provider, Veyt, a global provider analytical insight to businesses and gov- ernments pursuing net-zero targets, Factlines, a supplier risk management software provider, and Utel, a provider of services for telecom network monitoring and analysis. 2024 IN BRIEF (Figures in parentheses refer to the previous year) As a result of robust product development and strong focus on commercialisation, Alytic achieved notable ﬁnancial milestones in 2024, increasing revenues to NOK 67 million, (+44% year-over-year) of which 74% were recurring revenue. Total ARR for the Alytic portfolio increased by 31% in 2024, to NOK 55 million. Veyt Veyt grew ARR by 51% year-over-year to NOK 20.3 mil- lion. Veyt is a leading provider of EAC-analytics (Energy Attribute Certiﬁcates) and have during 2024 positioned themselves as a thought leader for the global carbon markets. This has led to a strong growth of new cus- tomers on the platform. Going forward, Veyt will further develop products and tools for PPAs, maritime sector and renewable fuels (biomethane, ammonia, green hydrogen). ETS 2 and carbon credits will also be an important growth area for Veyt. Kontali Kontali grew ARR by 18% year-over-year to NOK 19 million. Total revenue grew by 34% year-over-year to NOK 32.5 million, of which recurring revenue constituted 60%. Kontali continued to expand their offerings on their platform, Kontali Edge, by adding new predictions and new species. The company also strengthened the management team with a new CEO, CAO (Chief Analytics Ofﬁcer) and CCO in 2024. Factlines Factlines grew ARR by 43% year-over-year to NOK 11.4 million. Factlines has built a taxonomy reporting product that simpliﬁes the reporting process. The company’s supply chain offering has expanded from helping customers with compliance on the Norwegian Transparency Act, into a comprehensive supplier risk management solution. Utel Utel grew ARR by 11% year-over-year to NOK 5.1 million. With a particular focus on fraud detection, Utel made signiﬁcant progress in 2024 with regards to both product development and commercialisation. Utel signed up their ﬁrst customers to their new product suite in December. The company is going into 2025 with a strong sales pipeline and sees growth potential from an increased market need to ﬁght and prevent cyber-crime. SUSTAINABILITY Alytic has two activities eligible for the EU Taxonomy: Edge by Kontali, and Veyt, providing insights on low- carbon markets and renewable energy. These activities account for 54.1% of turnover being Taxonomy-eligible, while eligible, non-aligned CapEx accounts for 68.8%. OUTLOOK Alytic is positioned to continue its upward trajectory by leveraging strategic accomplishments from 2024. Alytic maintains its focus on data-driven products delivered as SaaS solutions and expects this to drive further ARR growth and market expansion. Alytic is actively seeking growth and partnership opportunities for its existing portfolio. FINANCIAL FIGURES (MNOK) 2024 2023 2022 Revenue and other income 67 46 41 EBITDA -49 -71 -41 Operating proﬁt -88 -85 -46 Operating margin -132% -184% -112% Earnings before tax (EBT) -89 -85 -45 Net proﬁt -86 -80 -43 Operating cash ﬂow -47 -55 -35 NIBD 14 4 -18 Equity 147 140 132 Equity ratio 58% 62% 67% SUSTAINABILITY KPIs 2024 2023 2022 Environment Scope 1 GHG (tCO 2 e) 0 0 0 Scope 2 GHG (location-based, tCO 2 e) 2 6 2 Scope 3 GHG (tCO 2 e) 1 84 - - Energy consumption (MWh) 182 291 324 Renewable energy consumption (location-based, % of total) 94% 93% 95% Social Female employees 31% 30% 32% Female members of Executive Management 35% 28% 6% Lost time injury frequency rate per million exposed hours 0 0 0 Sick leave rate 2% 2% 3% Voluntary turnover rate 2 7% - - Governance Signature of Code of Conduct 88% 92% 20% Internal training in Code of Conduct 88% 92% 20% Signature of Business Partner Code of Conduct 3 - - - Convictions of violation of anti-corruption or anti-bribery laws 0 0 0 1. Only a limited set of Scope 3 categories were reported in previous years such that the total emissions in 2024 are not comparable to previously reported data. 2. Turnover rates for 2023 and 2022 include involuntary as well as voluntary departures. 3. Records signatures by partners assessed as high-risk. Data was collected on this KPI for the ﬁrst time in 2024. 42 43 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Portfolio company Head ofﬁce Arendal, Norway Countries 1 Ownership 100% Chief Executive Ofﬁcer Tom Krusche Pedersen Employees 5 Chair Lars Peder Fensli All Arendals Fossekompani's property-related companies and property investments are comprised in AFK Eiendom. BRYGGEBYEN The largest company in the AFK Eiendom portfolio is Vindholmen Eiendom, which is transforming an old shipyard area into a new urban residential and commer- cial zone under the name, Bryggebyen. The transforma- tion will take 10-15 years to complete and will establish 500–700 residential units in combination with exciting trade and commerce offerings. The third stage of the apartment complex at Bryggebyen was completed in 2024, adding 48 apartments to the total of 161 developed so far. The planning process for the fourth stage has begun. AFK Eiendom is also in the planning process to build an indoor swimming facility at Bryggebyen. Arendal munic- ipality has signed a long-term rental agreement, and a ﬁnal investment decision is expected in 2025. BØYLESTAD ENERGIPARK In June 2024, the Ministry of Local Government and Regional Development approved the designation by Froland municipality of a 1,600-dekar area at Bøylestad for industrial purposes. The site is one of the most important power hubs in the south of Norway which makes this area attractive for energy-intensive indus- tries. The Ministry has also emphasised the municipal- ity’s commitment to securing land for green industries and fostering local employment opportunities. With a long-term and responsible perspective, AFK Eiendom is working with local stakeholders to make a sustain- able plan for the development of Bøylestad Energipark. Preparation for starting the detailed zoning plans for the area is ongoing. ARENDAL AIRPORT & PROPERTY GULLKNAPP AFK Eiendom is the majority owner of Gullknapp, which comprises an airport and an attractive 200,000 sqm industrial and commercial area. The main user of the air- port facility is OSM Aviation Academy which runs a pilot school on the premises. BØLEVEGEN 4 This property was acquired in 2020 and is located along the Skien River, just one kilometre south of downtown Skien. The 4,700 sqm building is fully lent to Arendals Fossekompani’s portfolio company, ENRX, on a 15-year bare-house agreement. As the city of Skien expands, this 12,000 sqm riverfront property will be attractive both for commercial and residential development. LONGUM PROPERTY This 170,000 sqm property is located outside of Arendal, close to the E18 highway. In Q2 2024, it was announced that AFK Eiendom will build and lease new production facilities for Kitron. The new industrial building will be approximately 7,500 sqm and is expected to be com- pleted during the ﬁrst half of 2026. BEDRIFTSVEIEN 17 Bedriftsveien 17 is located in the middle of the emerg- ing commercial area, Krøgenes, three kilometers east of downtown Arendal. The 3,500 sqm building is fully leased to Scanmatic on a 25-year bare-house agree- ment. The area has grown in attractiveness following the completion of a new feed-in road to the E18 highway. SUSTAINABILITY AFK Eiendom's Scope 1 emissions remained at levels similar to previous years. Scope 2 emissions signiﬁcantly increased to account for leased assets, and Scope 3 emisisons were reported in full for the ﬁrst time, totalling 7,422 tCO2e. AFK Eiendom has several activities eligible for the EU Taxonomy, resulting in 94.2% of the turnover in 2024 being eligible. None of the activities are currently aligned. FINANCIAL FIGURES (MNOK) 2024 2023 2022 Revenue and other income 295 18 35 EBITDA 29 2 6 Operating proﬁt 13 -10 -7 Operating margin 4% -55% -19% Earnings before tax (EBT) 1 -14 -10 Net proﬁt -8 -14 -9 Operating cash ﬂow 200 -163 -40 NIBD 213 361 136 Equity 193 185 206 Equity ratio 37% 30% 47% SUSTAINABILITY KPIs 2024 2023 2022 Environment Scope 1 GHG (tCO 2 e) 23 21 20 Scope 2 GHG (location-based, tCO 2 e) 3.7 1.3 1.5 Scope 3 GHG (tCO 2 e) 1 7,422 - - Energy consumption (MWh) 623 276 295 Renewable energy consumption (location-based, % of total) 76% 75% 77% Social Female employees 0% 0% 0% Female members of Executive Management 0% 0% 0% Lost time injury frequency rate per million exposed hours 0 0 0 Sick leave rate 0% 0% 4% Voluntary turnover rate 2 0% 0% 0% Governance Signature of Code of Conduct 40% 40% 100% Internal training in Code of Conduct 40% 40% 100% Signature of Business Partner Code of Conduct 3 - - - Convictions of violation of anti-corruption or anti-bribery laws 0 0 0 1. Only a limited set of Scope 3 categories were reported in previous years such that the total emissions in 2024 are not comparable to previously reported data. 2. Turnover rates for 2023 and 2022 include involuntary as well as voluntary departures. 3. Records signatures by partners assessed as high-risk. Data was collected on this KPI for the ﬁrst time in 2024. 44 45 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Shareholder Information Arendals Fossekompani is committed to maintaining an open dialogue with shareholders, investors, analysts and the ﬁnancial markets in general. Our goal is to ensure that the share price reﬂects its underlying value by making all price- relevant information available to the market. We work to create shareholder value in the form of dividends and share price growth over time. In accordance with the company’s Corporate Governance Report, approved by the Board of Directors, the company’s dividend policy is to pay dividends that reﬂect the company’s long-term strategy, ﬁnancial position and investment capacity. DIVIDEND FOR 2024 Total dividends paid in 2024 amounted to NOK 220 mil- lion, corresponding to NOK 4.0 per share. Total dividends paid were equivalent to 2.5% of the volume-weighted average share price in 2024. DIVIDEND POLICY Subsequent to the close of the year, the Board of Directors decided that as of Q2 2025, Arendals Fossekompani will move from announcing dividends on a quarterly basis to announcing dividends on an annual basis. Arendals Fossekompani is an industrial investment company using its own capital to invest. Liquidity levels vary over time driven by investment/divestment activi- ties and underlying proﬁtability. The change is made to enable better long-term capital planning and ﬂexibility to create shareholder value as an investment company. When deciding the annual dividends, the Board of Directors shall take into consideration expected cash ﬂow, capital expenditure plans, divestments, ﬁnancing requirements and appropriate ﬁnancial ﬂexibility. Arendals Fossekompani moved from annual to quarterly dividends in 2020. When this was done, the ﬁrst quar- terly dividend was paid as of Q2 2020. For this reason, Arendals Fossekompani intends to maintain the quar- terly dividend until Q1 2025. SHARES AND SHARE CAPITAL On 31 December 2024, there was a total of 55,995,250 shares in the company, of which 1,058,832 were treasury shares (1.9 % of the total number of shares). Arendals Fossekompani’s three largest shareholders are Ulfoss Invest AS (26.3%), Havfonn AS (26.0%) and Must Invest AS (25.2%). There were 4,708 shareholders at year-end 2024, compared to 5,295 shareholders at the end of 2023. The Group’s shares consist only of Class A shares, all of which have equal rights. In accordance with Article 11 of the company’s Articles of Association, no shareholder may, personally or by proxy, vote for more than one quarter of the total number of shares. Due to Arendals Fossekompani’s hydropower produc- tion, the current Norwegian concession legislation stipulates, among other things, that a shareholder who acquires more than 20 % of the total number of shares must apply for a concession. The Concession Act requires that the Board of Directors approve such acquisitions. There are several other provisions in the concession legislation that may entail that acquisition of the company’s shares may have consequences for both the company itself and the other shareholders. Thus, the company has found it necessary to have the oppor- tunity to deny approval of the acquisition of shares. In accordance with Article 7 of the Articles of Association, any acquisition by means of transfer is conditional on the Board’s approval. Approval may only be denied if there is a valid reason for doing so. STOCK EXCHANGE LISTING Arendals Fossekompani ASA is listed at Oslo Børs under the ticker code AFK. The company was listed in 1913 and is the second oldest company at Oslo Børs. The shares are registered in the Norwegian Central Securities Depository with DNB ASA as the account operator and issuer. The securities identiﬁcation number for the share is ISIN NO 0003572802. CURRENT AUTHORISATIONS At Arendals Fossekompani’s Annual General Meeting on 15 May 2024, the Board of Directors was authorised to acquire treasury shares up to a maximum of 7.9%. In accordance with this authorisation, the Board of Directors is only permitted to acquire treasury shares at a price ranging from a minimum of NOK 10 and a maximum of NOK 2,000 per share. This authorisation will remain in effect until the Annual General Meeting in 2025. In 2024, the company sold a net of 79,079 shares in connection with the company’s incentive programme. OPTION SCHEMES As at 31 December 2024, Arendals Fossekompani had no option schemes. INVESTOR RELATIONS Arendals Fossekompani seeks to maintain an open dia- logue with shareholders, debt holders, ﬁnancial analysts, and the stock markets in general. The company regularly holds presentations in connection with the publication of quarterly results. All company press releases, stock exchange announcements and investor relations infor- mation are available at www.arendalsfossekompani.no. 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 200 400 600 800 1,000 1,200 1,400 The website also includes quarterly reports, annual report, presentations, Articles of Association, and the ﬁnancial calendar. NOMINATION COMMITTEE The company’s Nomination Committee consists of the following members: Morten Bergesen (Chair), Simen Flaaten, and Trine Must. AUDIT COMMITTEE The company’s Audit Committee consists of the fol- lowing members: Stine Rolstad Brenna (Chair), Morten Bergesen, and Anne Grethe Dalane. ANNUAL GENERAL MEETING The Annual General Meeting is held as early in the year as is practically possible after the close of the previous ﬁnancial year, usually in April or May. 21 days prior to the Annual General Meeting, meeting notices and attendance registration forms are sent to all shareholders with a known address and made available on the company’s webpage and via Oslo Børs’ distribu- tion service. The annual report and other enclosures to the meet- ing notice are made available solely via the compa- ny’s webpage and the Oslo Børs distribution service. Shareholders who wish to receive the enclosures by post must contact the company. Shareholders who are unable to attend the General Meeting may vote by proxy. Representatives from the Board of Directors and the auditor attend the General Meeting. The Chief Executive Ofﬁcer (CEO) and the Chief Financial Ofﬁcer (CFO) attend on behalf of the Executive Management. SHARE PRICE AND MARKET CAP The price of shares in Arendals Fossekompani decreased by 14% in 2024 and closed at NOK 142.4 at year-end, cor- responding to a market capitalisation of NOK 8 billion at year-end. TRADING VOLUME Arendals Fossekompani's trading volume was lower in 2024 compared to 2023, with a total of 2,406,291 shares traded in 2024, corresponding to 4.3% of all shares. Overall turnover from trading of the AFK share in 2024 was NOK 388 million, compared to NOK 563 million in 2023. KEY FIGURES FOR AFK SHARE (NOK) 2024 2023 2022 2021 2020 Closing price 31/12 1 142.4 164.8 250.5 441.0 180.0 Annual growth (%) -13.6 -36.0 -43.0 145.0 75.0 High/Low 2 187 / 138 273 / 127 471 / 214 503 / 175 195 / 82 Share price average 3 163 189 322 302 127 Market cap 31/12 (million) 7,974 9,228 14,027 24,204 9,863 Price/Book value equity 31/12 1.5 3.0 4.6 8.4 2.9 Dividend per share 4.0 4.0 7.6 37.1 3.4 Dividend accumulated 4 133.6 129.6 125.7 118.1 81.1 Annual turnover (million) 388 563 1,299 1,113 282 Volume 2,406,291 3,457,029 3,430,618 3,472,586 1,979,993 Total shareholder return (%) -11.2 -34.0 -41.5 166.0 78.3 1) Numbers adjusted for share split effectuated in 2020. 2) Based on closing price. 3) Paid quarterly. 4) Dividend accumulated last 10 years. SHARE PRICE LAST 20 YEARS (NOK) Share price Share price incl. dividend Share price incl. reinvested dividend 46 47 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Reporting 100 years ago Despite ample reservoir levels in the fall of 1923, an unusually late and cold spring in 1924 led to water scarcity in the river system. As a result, power delivery had to be reduced from March 15, 1924, until the spring ﬂood around April 8. All available power capacity had been contracted and was sold to the two major offtakers of electricity – Det Norske Nitridaktieselskap and Arendal Smelteverk. 1924 TOTAL REVENUE FOR THE YEAR NOK 1,234,000 NET PROFIT NOK 431,000 DIVIDEND PAID TO SHAREHOLDERS NOK 288,000 Nitriden. Maskineri for omforming av strøm fra vekselstrøm til likestrøm i omformerstasjonen. Photo: Magnus Løvfold, Aust-Agder museum og arkiv – KUBEN 48 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Corporate Governance Corporate governance report 52 Board of Directors 60 50 51 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Corporate Governance Report 2025 While listed on the stock exchange Oslo Børs, Arendals Fossekompani is subject to reporting requirements for corporate governance under the Accounting Act section 3-3b, Norwegian securities trading legislation, and the Oslo Stock Exchange continuing obligations of listed companies. CORPORATE GUIDELINES The following guidelines form the basis for corporate governance at Arendals Fossekompani: • Arendals Fossekompani shall communicate relevant information honestly and openly to the public about our activities and any circumstances related to corporate governance. • The Board of Directors at Arendals Fossekompani shall be autonomous and independent of Group Management. • Emphasis shall be placed on avoiding conﬂicts of interest between shareholders, members of the Board of Directors and Executive Management. • The tasks and functions of the Board and Group Management at Arendals Fossekompani shall be distinct and clearly deﬁned. • All shareholders shall be treated equally. NORWEGIAN CODE OF PRACTICE Each element of the Norwegian Code of Practice for Corporate Governance (NUES), last revised on 14 October 2021, is addressed below. A total review and amendment of this Corporate Governance Report was performed by the Board of Directors in 2025, follow- ing the changes made in the company since the last Corporate Governance Report of April 2024. A descrip- tion is given of Arendals Fossekompani’s compliance with, and deviations from, the Code of Practice. A complete overview of the Code of Practice and ofﬁcial remarks by the Oslo Stock Exchange are available online at nues.no. 1. CORPORATE GOVERNANCE REPORT Arendals Fossekompani has prepared a separate Corporate Governance Report, and the Board has decided to implement the Norwegian Code of Practice for Corporate Governance. We have implemented and updated further instructions for corporate governance, including rules of procedure for the Board of Directors of November 2024, rules of procedure for the CEO of November 2024, instructions for the Audit Committee of November 2024, instructions for the Remuneration Committee of November 2024, instructions for all employees on the handling of insider information of March 2021, and a policy on disclosure of information of December 2021. Our Code of Conduct reﬂects our commitment to ethical business conduct and addresses topics such as anti-corruption, equality and anti-discrimination, and sustainability. The Code of Conduct is subject to regular review and the latest version was adopted by the Board of Directors in November 2024. Our expectations and guidelines towards suppliers and business partners are set out in the Business Partner Code of Conduct as approved by the Board of Directors. BUSINESS ACTIVITIES The objective of Arendals Fossekompani is, through in-house production, participation in new infrastructure, purchase, or leasing, to make use of or sell electricity, as well as to participate, directly or indirectly, in other indus- trial activities or business enterprises, including invest- ing in real estate. These objectives are expressly stated in Section 1 of our Articles of Association. The Articles of Association are available on our website: arendalsfosse- kompani.no. Arendals Fossekompani has signiﬁcant ﬁnancial capac- ity. Our investment portfolio will, at all times, consist partly of long-term and active ownership commitments, and partly of liquid ﬁnancial assets. Liquidity will be man- aged mainly via listed shares and bonds. The bulk of our share portfolio will consist of a limited number of major investments. Our investment strategy is based on our belief that active, long-term, and responsible ownership provides the best risk adjusted return over time. Further descrip- tions of targets, strategies, risk proﬁle and the objective of creating long-term value for shareholders in a sustain- able way, is described elsewhere in the Annual Report, also available at arendalsfossekompani.no/en/inves- tor-relations. Our targets, strategies and risk proﬁle are reviewed annually. Sustainability is regularly on the Board’s agenda. Every year a materiality analysis of topics rele- vant for environmental, social issues and governance is presented to the Board of Directors. In Arendals Fossekompani, we integrate considerations related to our broader stakeholders into our business and value creation for our shareholders through our sustainability framework and reporting. Our objectives, principal strategies and stakeholder engagement are further described elsewhere in the Annual Report, and on our website arendalsfossekompani.no. We have a clear focus on our corporate responsibility for environmental and social conditions, including a good working environment, diversity, equality, non-dis- crimination, human rights and anti-corruption and anti-bribery. We are committed to contributing to the UN Sustainable Development Goals. Further details and descriptions on our work on these matters can be found elsewhere in the Annual Report, and on our website. Arendals Fossekompani releases its Transparency Act Report in accordance with the Norwegian Åpenhetsloven as a separate report every year before June. EQUITY AND DIVIDENDS Equity The book value of the Group’s equity as per 31 Decem- ber 2024 was MNOK 5,414 which amounted to 61% of total assets. Market value is signiﬁcantly higher, and the company has a solid ﬁnancial foundation. The Board constantly assesses the company’s ﬁnancial capacity in light of our objectives, strategy and risk proﬁle. Dividend policy It is Arendals Fossekompani’s policy to pay a dividend that reﬂects our long-term strategy, ﬁnancial position and investment capacity. The Board has decided that as of Q2 2025, Arendals Fossekompani will move from announcing dividends on a quarterly basis to announcing dividends on an annual basis. Arendals Fossekompani is an industrial invest- ment company using its own capital to invest. Liquidity levels vary over time driven by investment/divestment activities and underlying proﬁtability. The change is made to enable better long-term capital planning and ﬂexibility to create shareholder value as an investment company. When deciding the annual dividends, the Board of Directors shall take into consideration expected cash ﬂow, capital expenditure plans, divestments, ﬁnanc- ing requirements and appropriate ﬁnancial ﬂexibility. Arendals Fossekompani moved from annual to quar- terly dividends in 2020. When this was done the ﬁrst quarterly dividend was paid as of Q2 2020. For this reason Arendals Fossekompani intends to maintain the quarterly dividend until Q1 2025. Capital increase No authorisation to undertake a share issue has been granted to the Board. The most recent capital increase occurred in 2012, when the share capital was raised by NOK 201,582,900 to NOK 223,981,000 through a trans- fer from other funds. Purchase of treasury shares The General Meeting can authorise the Board to pur- chase up to 10% of the company’s own shares. At the Annual General Meeting on 15 May 2024, the Board was authorised to purchase treasury shares with a total nominal value of up to NOK 17,769,000, corresponding to approximately 7.93% of the company’s total number of shares. The terms of the authorisation permit the Board to acquire treasury shares only between a minimum price of NOK 10 and a maximum price of NOK 2,000 per share. This authorisation will remain in effect until the Annual General Meeting in 2025 and no longer than 30 June 2025. As per 31 December 2024, the Group owned a total of 1,058,832 shares, corresponding to 1.9% of all the out- standing shares in the company. These shares are freely negotiable. EQUAL TREATMENT OF SHAREHOLDERS AND TRANSACTIONS WITH RELATED PARTIES Share class The Group’s shares consist exclusively of A-shares. According to Section 10 of our Articles of Association, no shareholder may personally or by proxy vote for more than one quarter of the total number of shares. Acquisition of shares by means of transfer shall be sub- ject to the approval of the Board of Directors. All shares have equal rights. Transactions involving treasury shares The Board may exercise its authority to acquire treasury shares as long as the shares are acquired at the market price. Correspondingly, the divestment of acquired shares will also be undertaken at market price yet so that the shares can be discounted if the shares are used in connection with programmes for employees and board members. At the same time, the authorisation gives the Board the ﬂexibility to utilise the mechanisms that the Public Limited Liability Companies Act gives access to in situations where the acquisition or disposal of shares is considered advantageous to the company and the company’s shareholders, including for use in share purchase programmes for directors and employ- ees at the company. Transactions with related parties No transactions have occurred between the company and shareholders, board members, senior executives or their related parties in 2024 that could be described as not immaterial transactions. In 2024, 75,779 shares were sold from the company to senior executives and board members, in accordance with the approved share purchase programme. See Note 4.3 of the Financial Statement. 52 53 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Guidelines for board members and senior executives If a board member or senior executive has a material direct or indirect interest in an agreement that is being entered into by the company, that person must disclose the fact before the matter is put to the Board, and he or she may not participate in discussions or votes on that matter. FREELY NEGOTIABLE SHARES Under current Norwegian legislation on industrial licensing, a shareholder who acquires more than 20% of the total number of shares in the company must apply for a license. The law requires the Board’s approval for such acquisitions. A number of other provisions of the Waterfall Rights Act could cause the acquisition of the company’s shares to have consequences for both the company itself and other shareholders. Therefore, the company has found it necessary to reserve the right to refuse approval of share acquisitions. According to Section 7 of the Articles of Association, any acquisi- tion by means of transfer is conditional on the Board’s consent. Consent may be refused only on reasonable grounds. Deviations from the Code: The Articles of Association hold that transfer of shares is conditional on the Board’s consent. GENERAL MEETING Notiﬁcation The Annual General Meeting is held as early as practi- cally possible after the close of the previous ﬁnancial year, usually in April or May. Meeting notices and atten- dance registration forms are sent to all shareholders no later than 21 days prior to the General Meeting through digital communication, or through regular mail to share- holders with a known address who do not consent to digital communication. Documents are also made available on our website arendalsfossekompani.no and through the Oslo Stock Exchange distribution service. The annual report and other enclosures to the General Meeting notices are made available solely via the website and the Oslo Stock Exchange distribution service. Shareholders who wish to receive the enclosures by regular mail must contact the company. The Board will provide shareholders with all the information necessary to help them take a position on all agenda items, along with proposals relating to the election of board members. Participation Shareholders can give notice of their participation either in writing or via email or digital solutions. The Board wishes to arrange the meeting so that as many as possible of the shareholders are able to participate. Shareholders who cannot attend are encouraged to appoint a proxy. We accommodate requests of digital attendance to the General Meeting in line with legal requirements. Representatives of the Board of Directors shall attend the General Meeting, along with the auditor. The Chief Executive Ofﬁcer (CEO) and the Chief Financial Ofﬁcer (CFO) shall participate on behalf of Group Management. Agenda and execution The Board of Directors will set the agenda according to the list in Section 10 of the Articles of Association. According to Section 10, the participants of the General Meeting appoint a chairperson to lead the meeting. NOMINATION COMMITTEE The company has a three-member Nomination Committee established in accordance with item 11 of the Articles of Association. The members of the committee are Morten Bergesen (chair of the committee), Trine Must and Simen Flaaten. The latest recommendation from NUES, last revised in October 2021, is to have no member in the Nomination Committee from the Board of Directors. Deviations from the Code: One of the members of the Nomination Committee is currently a member of the Board of Directors. Candidates eligible for election to the Board of Directors are announced in conjunction with the invitation to attend the General Meeting. Nominations for other candidates can be submitted before and during the General Meeting itself. According to the rules of procedure for the Nomination Committee approved by the General Assembly in May 2022, the Nomination Committee shall, in the judge- ment of candidates, evaluate the competence required by the company. The Nomination Committee shall work towards diversity in the company’s Board of Directors. The Nomination Committee shall also consider that the Board of Directors is ﬁtted to act independently of special interests. The members of the Nomination Committee are elected for a period of one year. There is no maximum length of tenure for the members of the Committee. The Committee has 1/3 female members. According to Norwegian law, it is prohibited to obtain certain information about job applicants, in particular linked to underrepresented social groups. Although it is the company’s objective to have broad representation at all levels, Arendals Fossekompani does not track or report information relating to underrepresented social groups. The Nomination Committee should be composed so that it safeguards the interests of the shareholder community and the company’s need for expertise and diversity. This implies that the individual Committee members must have the necessary experience, compe- tence and capacity to carry out their duties satisfactorily and independently. The competence of the members of the Committee covers a wide range of industries, tech- nologies, board experience, compliance, governance, ﬁnance and sustainability. These are all competencies important to the development of the company. BOARD OF DIRECTORS: COMPOSITION AND INDEPENDENCE The Board consists of seven members and is currently composed of the following: Trond Westlie (Chair, member since 2022), Morten Bergesen (member since 2004), Didrik Vigsnæs (member since 2016), Stine Brenna (member since 2020), Anne Grethe Dalane (member since 2022), Lise Lindbäck (member since 2022) and Arild Nysæther (member since 2024), all elected by the shareholders. The members are elected for a period of one year. There is no maximum length of tenure for the members of the Board of Directors. The Board has 3/7 female members. According to Norwegian law, it is prohibited to obtain certain information about job applicants, in particular linked to underrepresented social groups. Although it is the company’s objective to have broad representation at all levels, Arendals Fossekompani does not track or report information relating to underrepresented social groups. Note 4.1 of the Financial Statement contains information about board meeting attendance. Information about the competence and independence of board members is provided in subsequent paragraphs. Election of board members The General Meeting elects seven representatives to the Board of Directors. Ahead of the election, the names of candidates may be submitted to the Nomination Committee by an individual shareholder or by several shareholders jointly. Hence, stakeholders’ views will be taken into consideration by the Nomination Committee. Nominations submitted in time will be included in the invitation to attend the General Meeting sent to all shareholders and posted on our website. Board mem- bers are elected by simple majority. Members are elected for one year at a time, with the possibility of re-election. The composition and competence of the Board of Directors The Board of Directors should be composed such that it safeguards the interests of the shareholder community and the company’s need for expertise and diversity. This implies that the individual board members must have the necessary experience, competence and capacity to carry out their duties satisfactorily and independently. The competence of the members of the Board covers a wide range of industries, technologies, board expe- rience, compliance, governance, ﬁnance and sustain- ability. These are all competencies important to the development of the company. The presentation of the Board in this report gives an introduction of the individ- ual competencies and main positions held by each of the Board members. According to the Articles of Association, the Board shall comprise ﬁve to seven members. The Board currently consists of seven members. The CEO is not a member of the Board. The members of the Board are elected for one year at a time and the Board elects its own Chair. The latest recommendation from NUES, last revised in October 2021, is for the General Assembly to elect the chair of the Board of Directors. Deviations from the Code: The Articles of Association hold that the Board elects its own chair. Trond Westlie has been elected to chair the Board. Changes to the Board of Directors in 2024 At the Annual General Meeting held in May 2024, Arild Nysæther was elected as a new member of the Board of Directors in replacement of Christian Must and other members of the Board of Directors were re-elected for a period of one year. Independence of the Board of Directors All shareholder-elected board members are considered autonomous and independent of Group Management. The same applies to material business connections. At the close of the year, Didrik Vigsnæs is the Managing Director of Vicama AS, the largest shareholder in Ulfoss Invest AS, which owns – directly, indirectly or via related parties – approximately 26% of the Arendals Fossekompani shares. Morten Bergesen was Co-owner and Advisor of Havfonn AS at the close of the year, which owns directly, indirectly or via related parties – approx- imately 26% of the Arendals Fossekompani shares. Christian Must was at the close of the year, member of the board in Must Invest AS, which owns directly, indi- rectly or via related parties – approximately 25% of the Arendals Fossekompani shares. Arild Nysæther was at the close of the year CEO of Must Invest AS which owns directly, indirectly or via related parties – approximately 25% of the Arendals Fossekompani shares. The Board works actively to ensure that no conﬂict of interest exists between shareholders, the Board, Group Management, and other stakeholders. Stakeholders will be informed if conﬂicts of interest were to occur. The Code of Conduct describes how Board members should behave if conﬂicts of interest were to occur. All Board members receive information about the Code of Conduct. 54 55 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Shares owned by board members In addition to the shares held by the representatives of the three principal shareholders, as at 31 December 2024, the board members had the following shareholdings either personally or through wholly-owned companies: • Trond Westlie (Chair): 7,048 shares • Stine Rolstad Brenna (Board member): 7,500 shares • Anne Grethe Dalane (Board member): 1,000 shares 9. THE WORK OF THE BOARD OF DIRECTORS The Board’s tasks The Board shall determine the Group’s strategy, carry out necessary control functions and ensure that the Group is satisfactorily managed and organised. The Board shall set the company’s ﬁnancial objectives and approve its plans and budgets. The Board is also re- sponsible for approving and updating the organisation’s purpose, value statement, policies and goals related to sustainability. The senior executives in the Company are delegated the task to update and present material to the Board that is relevant to make good decisions regarding plans budgets and policies and goals related to sustainability. Furthermore, the Board oversees the organisation’s due diligence and other processes to identify and manage the organisation’s impacts on the economy, environment, and people. Stakeholders are encouraged to support these processes with their input during the Annual General Meeting. The targets, strategies and risk proﬁle of the Company are reviewed annually by the Board of Directors. The sustainability strategy, materiality analyses, stakeholder analyses and the sustainability report are approved by the Board of Directors. The operational implementation of these processes is delegated to the Chief Sustainability Ofﬁcer (CSO) of the company. This is in accordance with the Environmental Policy of the company. The Board of Directors has delegated the formal stake- holder dialogue to the senior executives in the portfolio companies. A review of the systematic stakeholder interviews is each year presented to the Board of Directors from the CSO. Rules of Procedure for the Board The Rules of Procedure encompass the following: the role of the Board and its tasks, the tasks of the CEO and their obligations towards the Board, formal procedures for the handling of matters brought before the Board, and notice of board meetings and matters required to be considered by the Board. The Rules also stipulate when the Board is in quorum, how minutes are to be kept, how legal disqualiﬁcation is determined and how the duty of conﬁdentiality is to apply. The Board may de- viate from the Rules of Procedure in certain situations. Providing instructions for executive management A clear distinction has been made between the tasks and work of the Board and that of Group Management. The Chair of the Board is responsible for ensuring that the Board’s proceedings and work are conducted in an effective and correct manner. The CEO is responsible for managing company operations. The CEO’s tasks are clearly stated in the instructions drawn up for that position. Notice of board meetings and meeting procedures The Board has an annual plan containing a set of pre- determined topics for consideration at board meetings. The Board normally meets 6 to 8 times a year. Additional meetings are held when necessary. In 2024, a total of 17 board meetings were held. All board members receive information about the company’s operational and ﬁnancial performance on a regular basis and in good time ahead of scheduled meetings. Board members also receive monthly operational reports. The company’s business plan, strategy and risks are reviewed and evaluated regularly by the Board. The ﬁnal agenda for the board meeting is determined by the Chair in consultation with the CEO. The CEO attends board meetings together with the board members. Other members of Group Management are invited to attend when this is deemed necessary. Duty of conﬁdentiality – communication between the Board and shareholders In principle, the minutes of board meetings and the Board’s discussions are conﬁdential, unless the Board decides otherwise or there is no apparent reason to maintain conﬁdentiality or secrecy. Legal competence The Board complies with the rules for legal competence and disqualiﬁcation pursuant to Section 6–27 of the Norwegian Public Limited Liability Companies Act and the Board’s own Rules of Procedure. There were no issues in 2024 which a board member was disqualiﬁed from discussing or voting on for reasons of legal competence. See also item 4 above, Guidelines for Board Members and Senior Executives. Use of board committees The Group has established an Audit Committee and a Remuneration Committee, both comprising members of the Board. The Audit Committee The company has a three-member Audit Committee established in accordance with the Rules of Procedure for the Audit Committee approved by the Board of Directors. The members are all members of the Board of Directors and consist of Stine Rolstad Brenna (Chair, member since 2020), Morten Bergesen (member since 2010) and Anne Grethe Dalane (member since 2022). The commit- tee has 2/3 female members. There are no underrepre- sented social groups in the committee. All members of the Audit Committee are elected from the members of the Board of Directors and are inde- pendent of the Group Management. The competence of the members is covered under the section about the Board of Directors and the presentation of the Board of Directors in the annual report. The Audit Committee is a preparatory committee to the Board of Directors. The Committee is also responsible for providing support to the Board in the reporting of annual accounts, audits, internal control, risk manage- ment, sustainability reporting and more. The rules of procedure for the Audit Committee were last revised by the Board of Directors in November 2024, to under- line the obligation to supervise sustainability reporting and the sustainability-related audit, in line with the EU Directive (EU) 2922/2464. At least one member shall be independent of the company’s Group Management and have qualiﬁcations in accounting or auditing. Board members who are also members of the Group Management cannot at the same time be members of the Audit Committee. The Remuneration Committee The Remuneration Committee is a preparatory com- mittee to the Board of Directors comprising three board members including the Chair of the Board. The Committee shall prepare compensation-related matters for the Board and prepare the policy for the remuneration of executive management and the Remuneration Report to the General Meeting. The company has a four-member Remuneration Committee established in accordance with the rules of procedure for the Remuneration Committee approved by the Board of Directors. The members are all mem- bers of the Board of Directors and consists of Trond Westlie (Chair, member since 2022), Lise Lindbäck (member since 2022), Didrik Vigsnæs (member since 2019) and Arild Nysæther (member since 2024). The committee has no female members. According to Norwegian law, it is prohibited to obtain certain informa- tion about job applicants, in particular linked to under- represented social groups. Although it is the company’s objective to have broad representation at all levels, Arendals Fossekompani does not track or report infor- mation relating to underrepresented social groups. All the members of the Remuneration Committee are elected from the members of the Board of Directors and are independent of Group Management. The competence of the members is covered under the section about the Board of Directors. Self-assessment The Board carries out an assessment of its activities once a year, and this was also done in 2024. In the assessment, the Board considers the outcomes of its processes and tasks as described above, including their own performance in overseeing the management of the organisation’s impacts on the economy, environment, and people. The starting point for this assessment is Arendals Fossekompani’s business activities and the work of the Board, how the Board works and its interac- tions. With regards to this, the Board also evaluates its performance in relation to corporate governance. The next self-assessment will take place in 2025. Onboarding and competence development To advance the collective knowledge, skills, and experience of the Board related to sustainability, the Board has an onboarding programme covering these topics as board members enter their roles. Through regular presentations about topics related to sustainability in the board meetings as well as more in-depth strategic presentations about this topic in strategy meetings, the Board will further advance their collective knowledge on this topic. 10. RISK MANAGEMENT The Group has no separate internal auditing depart- ment. Financial audits are carried out on a task-shar- ing basis, and in compliance with our guidelines and approval routines. The Board carries out an annual review of the company’s most important risk areas and internal controls and receives a report from the auditor addressing such matters. The Board evaluates the com- pany’s core values and guidelines on ethics and social responsibility every year and veriﬁes the extent of compliance with these guidelines. Group and company ﬁnancial reporting process The Board receives monthly ﬁnancial reports, with accompanying comments on the ﬁnancial performance of the Group, the company and all portfolio companies. Extensive reports are prepared every ﬁscal quarter, with comments about the ﬁnancial status of all levels in the Group. The ﬁnance department analyses the income state- ment and balance sheet in connection with each monthly report. A detailed reconciliation of balance 56 57 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE sheet and income statement items are prepared each quarter, based on a predetermined plan. The value of material and risk-exposed balance sheet items are assessed. Major and unusual transactions are reviewed. All control procedures are documented. The most signiﬁcant portfolio companies (see Financial Note 1 – Segment reporting) have similar routines for ﬁnancial reporting to the Group. FCCS Oracle, a cloud- based database solution delivered by Oracle, is used for ﬁnancial consolidation. Our portfolio companies report all ﬁgures to this database online. The ﬁnance departments at our portfolio companies are responsible for the quality of the data reported each month and quarter. The quality of the reported data is checked by our auditors in connection with the preparation of the annual ﬁnancial statements. Portfolio company ENRX also uses FCCS Oracle for its consoli- dation. Other portfolio companies use spreadsheets for consolidation. The Audit Committee (see above) carries out and doc- uments a detailed review of the quarterly and annual reports prior to their consideration by the Board. The minutes and documentation from the Audit Committee meetings are available to the Board. Critical concerns Arendals Fossekompani has guidelines for ethical business conduct (the Code of Conduct) which can be found on the company’s website. All employees and the Board receive training in our Code of Conduct and the whistleblower policy, which explains the company’s internal guidelines on how to deal with critical concerns if they occur. The Board is alerted about critical events. No critical concerns were reported to the Board in 2024. Liability insurance Arendals Fossekompani holds a Directors' and Ofﬁcers' Liability Insurance with world-wide coverage. 11. REMUNERATION TO THE BOARD OF DIRECTORS The Annual General Meeting determines the remu- neration payable to board members. The 2024 Annual General Meeting resolved that, with effect from May 2024, the Chair of the Board will receive a fee of NOK 900 000 per year and NOK 400 000 will be paid to the other board members every year. Remuneration paid to board members is not linked to ﬁnancial performance or option schemes. None of the Board’s shareholder-elected members work for the company in other capacities. 12. REMUNERATION OF SENIOR EXECUTIVES The Remuneration Policy with guidelines for remu- neration of executive management and report on the annual remuneration of executive management is subject to approval and advisory vote by the Annual General Meeting in accordance with the Public Limited Companies Act section 6-16 A and B. The General Meeting approves any material changes to the Remuneration Policy and at least every fourth year, and shall provide an advisory vote on the annual Remuneration Report of the previous year on an annual basis. No consultants are involved in determining remuneration. The Remuneration Report was adopted in the Annual General Meeting in May 2024. The Remuneration Policy was last updated by the Annual General Meeting in 2024. The Remuneration Policy and Remuneration Report are available on our website. Shareholders are encouraged to state their opinions regarding remuneration of both the Board of Directors and Senior Executives at the Annual General Meeting. Guidelines The CEO’s employment terms and conditions are deter- mined by the Board of Directors. Each year the Board makes a thorough assessment of the salary and other remuneration paid to the CEO in line with the guidelines in the Remuneration Policy. The Board may also award an annual performance-related bonus to the CEO. The Board’s evaluation is based on market surveys for similar positions. The terms and conditions for other senior executives and employees at the parent com- pany are set by the CEO in line with the guidelines in the Remuneration Policy. The CEO informs the Chair of the Board of the terms and conditions. Terms and conditions for the senior executives of port- folio companies are set by the boards of the respec- tive companies. The Board takes the position that the company must remain competitive with regards to the remuneration paid to senior executives, without being complicated or wage-leading. The remuneration is structured to provide strong alignment between the interests of executives and shareholders, including a focus on delivering on the company’s key strategic objectives, and in support of the business strategy and long-term interests. More information about the purpose and principles for remuneration of senior executives in Arendals Fossekompani can be found in the Remuneration Policy published on our website. A description of how the remuneration policy for members of the Board and senior executives relate to their objectives and perfor- mance in relation to the management of the organi- sation’s impacts on the economy, environment, and people, can also be found in this report. Performance-related remuneration Senior executives at the parent company beneﬁt from performance-related bonus schemes as described in the Remuneration Policy and Remuneration Report available at arendalsfossekompani.no. Portfolio companies offer performance-based remuneration to varying degrees, as stipulated in the employees’ contracts. Terms and conditions Terms and conditions for remuneration of the Board of Directors are described in Financial Note 4 of the Annual Report. 13. INFORMATION AND COMMUNICATION Annual ﬁnancial statements and annual report – periodic reporting. The Group normally publishes its preliminary annual ﬁnancial statements in February. The complete annual ﬁnancial statements, along with the Annual Report, are published on our website in March or April. In addition, accounting ﬁgures are reported on a quarterly basis. The company’s ﬁnancial calendar is published on the company’s website. Other market information It is considered important to the Group to inform owners and investors about our performance and ﬁnancial status. Emphasis is placed on providing the ﬁnancial market with the same information at the same time. In conversations with shareholders and analysts, care is taken to avoid giving more information to some than to others. Arendals Fossekompani has developed an Investor Relations Policy that is available on our web- site. Arendals Fossekompani insider instructions are updated according to the European Market Abuse Regulation (MAR). 14. GUIDELINES FOR EQUALITY AND DIVERSITY Arendals Fossekompani has implemented guidelines for equality and diversity for the composition of our Board of Directors, board committees and management. The guidelines states that diversity shall be an area of priority in nominating people to the governing bodies and management of the company. There is a particu- lar focus on ensuring diversity with regards to gender equality and diverse expertise. The guidelines set out more detailed objectives for the purpose of achieving these overall objectives, with both annual target dates and long-term target dates. The Board of Directors currently consists of three women and four men. The individuals on the Board of Directors have backgrounds from different industry sec- tors, which increases diversity. The Group Management currently consists of two women and four men. The indi- viduals in Group Management have backgrounds from different industry sectors, which increases diversity. The company has set the following objectives for diversity: • By 2030, a minimum of 40% of the Executive Management shall be women. • By 2027, a maximum of 70% of our employees shall be of any one gender. During 2024, Arendals Fossekompani recruited new col- leagues and is happy to see a growth in the number of female employees, which is a good step in our continued journey towards better inclusion and greater diversity. 15. TAKEOVERS Based on our current shareholder structure, the condi- tions described for takeovers do not apply to the com- pany. The rules of procedure for the Board of Directors of November 2024 do however include guidelines and principles for the event of a takeover bid and for trans- actions that in fact constitute a disposal of the business of Arendals Fossekompani. 16. AUDITOR The auditor’s formal relationship with the Board of Directors The auditor is at the disposal of the Board of Directors and shall attend board meetings if needed. The audi- tor shall participate in Audit Committee meetings and attend any board meetings that deal speciﬁcally with the annual ﬁnancial statements. The auditor will at that time inform the Board about any issues or con- cerns they might have regarding the annual ﬁnancial statements and other matters, including any poten- tial disagreements between the auditor and Group Management. The Board holds annual meetings with the auditor to review reports submitted by the latter concerning the company’s accounting policies, risk areas and internal control routines. Auditor’s formal relationship with executive management The Board has drawn up guidelines for the Group’s business relations with the auditor. The fees paid to the auditor for statutory auditing and consulting services are presented separately in the annual ﬁnancial state- ments. PwC is the selected auditor. In addition to an ordinary audit, the ﬁrm has also provided consulting services within areas such as accounting, taxation and reporting to the Norwegian Water Resources and Energy Directorate (NVE). The Board regularly assesses whether the auditor’s control function is being carried out satisfactorily. 58 59 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Trond Ødegård Westlie Chair 1961, Norway Independent Joined Board since 2022 Current election period expires 2025 Education: Certiﬁed Public Accountant. MSc degree in accounting and auditing from the Norwegian School of Economics. Managerial functions in other enterprises: CFO, Executive Vice President and Member of the Executive Board in Ørsted A/S Board committee memberships in other enterprises: Shama AS Competences: Management: General, Financial, Risk, Project. Environment: Decarbonisation, Energy, Circular economy. Social: People management, Diversity & inclusion, Health & safety, Human rights. Governance: Business conduct. Other: IT, Cyber security, Investor and capital market relationship Board meetings attended in 2024: 17 Stine Rolstad Brenna Board Member 1965, Norway Independent Joined Board since 2020 Current election period expires 2025 Education: Master’s degree in corporate ﬁnance, international business and strategy from BI Norwegian Business School. Board committee memberships in other enterprises: Incari GmBH, Fount AS, Lyse AS, Lørenskog kommunale pensjonskasse, Rabbalshede Kraft AB, Theion GmBH. Competences: Management: General, Financial, Risk Stakeholder, Project. Environment: Decarbonisation, Energy, Biodiversity, Circular economy. Social: Diversity & inclusion, Health & safety, Human rights, Community inclusion. Governance: Business conduct. Other: IT, Investor and capital market relationship, Innovation Board meetings attended in 2024: 17 Morten Bergesen Board Member 1974, Norway Independent Joined Board since 2004 Current election period expires 2025 Education: Master’s degree in economics from BI Norwegian Business School Board committee memberships in other enterprises: Aksjefonn AS, Bergehus Holding AS, Breifonn AS, IFM AG, Klynge, THF AS, UMC AG Competences: Management: General, Financial, Risk, Stakeholder, Project. Environment: Energy. Social: People management Governance: Business conduct. Other: Investor and capital market relationship Board meetings attended in 2024: 17 Didrik Vigsnæs Board Member 1966, Norway Independent Joined Board since 2016 Current election period expires 2025 Education: Bachelor’s degree in business administration from the University of Bradford School of Management. Managerial functions in other enterprises: CEO Vicama AS, CEO Ulfoss Invest AS Board committee memberships in other enterprises: Dima AS, Zone Security AS, Vicama Capital AS, Malling & Co Vekst AS, Oseberget Eiendom AS. Competences: Management: General, Financial, Risk, Stakeholder, Project. Environment: Energy. Social: People management Governance: Business conduct. Other: Investor and capital market relationship Board meetings attended in 2024: 17 Lise Lindbäck Board Member 1970, Norwegian Independent Joined Board since 2022 Current election period expires 2025 Education: Master’s degree in economics and business administration from the Norwegian Schoolof Economics Managerial functions in other enterprises: Chief Investment Ofﬁcer, Abler Nordic AS Board committee memberships in other enterprises: Alpha Corporate Finance AS, SubK Impact Solutions Ltd, Light Microﬁnance Ltd. Competences: Management: General, Financial, Risk. Social: Diversity & inclusion, Human rights, Community inclusion. Other: Investor and capital market relationship Board meetings attended in 2024: 17 Arild Nysæther Board Member 1971, Norwegian Independent Joined Board in 2024 (prevously 2015-2021) Current election period expires 2025 Education: Master of Science/Economics from BI Norwegian Business School. Master of Business Administration from the Norwegian School of Economics Managerial functions in other enterprises: CEO Must AS, CEO Fondsﬁnans AS. Board committee memberships in other enterprises: Gyldendal ASA, ARK Bokhandel AS, Glamox ASA, NSSL Global Ltd, Audit committee: Gyldendal ASA Nomination comitte: Polaris Media ASA; Zaptec ASA. Competences: Management: General, Financial, Risk, Stakeholder. Environment: Energy. Social: People management. Other: IT, Cyber security, Investor and capital market relationship, Innovation Board meetings attended in 2024: 12 Anne Grethe Dalane Board Member 1960, Norway Independent Joined Board since 2022 Current election period expires 2025 Education: Master’s degree from the Norwegian School of Economics Board committee memberships in other enterprises: BW LPG, TGS Competences: Management: General, Financial, Risk, Project. Environment: Energy Social: People management, Diversity & inclusion, Health & safety. Governance: Business conduct. Other: IT, Cyber security, Investor and capital market relationship Board meetings attended in 2024: 17 GOV-1 Board of Directors 60 61 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Basis for preparation 64 Governance 65 Strategy 68 IRO management 70 ESRS index 76 General Information 62 63 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE BP-1 GENERAL BASIS FOR PREPARATION OF SUSTAINABILITY STATEMENT Arendals Fossekompani’s sustainability statement covers data and information aligned with the calendar year of 2024, from 1 January to 31 December. The state- ment follows the disclosure requirements outlined in the ESRS adopted by the EU Commission and incorporated into Norwegian law. Consolidation The sustainability statement has been prepared on a consolidated basis, according to the same principles applied in the ﬁnancial statements. The statement includes Arendals Fossekompani and our portfolio com- panies ENRX, NSSLGlobal, Tekna, Alytic, AFK Vannkraft and AFK Eiendom. Given changes to our companies’ ownership structure in 2024, only data during the period of Arendals Fossekompani’s majority ownership of any company is consolidated into our sustainability totals for 2024, whereas the ﬁnancial statements present any companies discontinued during 2024 separately. For further information on our portfolio companies, see Performance chapter. In accordance with ESRS E1, all entities consolidated in the ﬁnancial statements are included in our greenhouse gas emissions inventory. These entities fall under the ﬁnancial control approach. Entities such as joint ventures that do not fall under our ﬁnancial control are considered a part of our value chain for these purposes and counted in Scope 3 Category 15. Arendals Fossekompani does not have operational control over the entities included in this category. Throughout the Sustainability Statement, "Arendals Fossekompani ASA" refers to the parent company, including AFK Group Management and AFK Vannkraft. "Arendals Fossekompani Group" is used to refer to the entire portfolio collectively, including the parent company. Value chain The sustainability statement covers Arendals Fossekompani’s upstream and downstream value chain and our own operations. Impacts, risks and opportunities were identiﬁed and assessed for the entirety of our value chain, and our targets, policies, actions and metrics collect data on and extend to the value chain where relevant and possible. BP-2 DISCLOSURES IN RELATION TO SPECIFIC CIRCUMSTANCES Estimations and measurement uncertainty Sustainability data are collected through various internal systems in place in different parts of the Group, such as human resources, learning and development, or enter- prise resource planning systems. Where data from such sources were not available, especially for data relating to our value chain, estimations have been made using indirect sources. While data available in different portfolio companies dif- fers, this is applicable primarily for Scope 3 greenhouse gas (GHG) emissions, which have relied on emissions fac- tors and estimation tools, and resource inﬂows, and spe- ciﬁcally material types and quantities, which have relied on estimations and industry averages. The methodology notes in E1 Climate change, E5 Resource use and circular economy and S1 Own workforce detail any estimations. 2024 has been the ﬁrst year of data collection on most Scope 3 GHG categories and resource inﬂows. Efforts are now underway to improve the quality of data year- on-year and data requirements will be incorporated into future supplier agreements where possible. Changes in preparation and presentation of the sustainability statement For the ﬁrst time, this sustainability statement has been prepared in accordance with CSRD and the ESRS it has set out. This is a change on previous years, in which the Global Reporting Initiative was used as a framework for reporting. To the extent possible, the calculation of metrics was maintained consistent for year-on-year comparability. Methodological notes are used through- out the sustainability statement to indicate how values were calculated. No material errors have been identiﬁed in previous years' data. For new disclosures introduced in 2024, it is not practicable to update the historical ﬁgures. This applies to most categories of Scope 3 GHG emissions and Resource inﬂows, such that it is not possible to compare Scope 3 GHG emissions in 2024 to previous years, and there is no data to compare Resource inﬂows this year to the past. Disclosures incorporated by reference Several disclosure requirements were partly or fully incorporated by reference: Disclosure Location in the Board of Directors Report SBM-1: Arendals Fossekompani’s employees, business model, value chain and activities About Arendals Fossekompani GOV-1: Experience and expertise of the Board of Directors relating to our activities, products, sectors, geographies and sustainability matters Corporate Governance Governance GOV-1 THE ROLE OF THE ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES Arendals Fossekompani ASA’s Board of Directors comprises of seven members, all of whom are elected by shareholders and as non-executive members are considered independent of Group management. There are 3 women (43%) and 4 men in the Board (57%). Employee representatives are not included in the Board of Directors. The Board of Directors' competences on sustainability matters is outlined under Corporate Governance. The responsibilities for sustainability governance, including the responsibility for impacts, risks and opportunities, are incorporated into our policies, mandates and terms of reference as follows: Board of Directors • Approves Arendals Fossekompani’s sustainability strategy, targets, materiality assessments, and sustainability reporting, as well as any revisions to the Environmental Policy • Annually re-evaluates the goals, strategies and risk proﬁle that have been set in this regard, including progress against targets • Oversees compliance and sustainability work, and ensures that Arendals Fossekompani has adequate internal control and systems for risk management, including in relation to ethical business conduct and corporate social responsibility Audit Committee • Prepares the Board’s oversight and quality assurance of the sustainability reporting process • Assesses and monitors the external auditor, and keeps the Board informed on the sustainability audit • Reviews risk management process and compliance Remuneration Committee • Reviews and proposes updates to the Remuneration Policy and Remuneration Report, including incentivisation tied to sustainability-related matters Nomination Committee • Assesses candidates for the Board, accounting for the need for expertise, diversity and independence Executive Management CEO • Leads and establishes guidelines for Arendals Fossekompani's compliance and sustainability work, including to map and manage the company's impact on sustainability matters • Updates the Board on sustainability issues CSO • Meets with Audit Committee when relevant throughout the year • Implements the Code of Conduct and monitors its operational effectiveness, including ensuring appropriate and ongoing communication and training for employees • Implements the Environmental Policy and monitors its operational effectiveness, including biannual reports to the Board for evaluation on progress against targets Further detail is outlined in the Code of Conduct and the Environmental Policy (described under Own workforce and Climate change chapters respectively), as well as the Instructions for the Board of Directors and its committees, and the Instructions for the CEO. Within Arendals Fossekompani and across the portfolio, dedicated sustainability functions work on day-to-day implementation of the legal and regulatory require- ments, data collection, and sustainability strategies. In 2024, an internal structure to meet the requirements of CSRD was established, comprising of the core sus- tainability team at Arendals Fossekompani, overseen by a steering committee including the CEO and CSO, and consulting and updating the Executive Management and other functions across the company regularly. Arendals Fossekompani’s Board of Directors is obligated to follow the legislation in force at any given time, as well as the company’s Articles of Association, and the author- ity and instructions given to it by the General Meeting. It is essential for Arendals Fossekompani’s overall strat- egy, management and the organisation of the business, including supervising the company’s management team to ensure that the business is run in a responsible manner. The Board’s responsibilities include oversight of Arendals Fossekompani’s compliance and sustainability work, including those relating to governance issues such as corruption and bribery, and the whistleblowing process. GOV-2 INFORMATION PROVIDED TO, AND SUSTAINABILITY MATTERS ADDRESSED BY THE UNDERTAKING’S ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES The Board of Directors and its Audit Committee are informed by the Chief Sustainability Ofﬁcer about key developments relating to sustainability matters multi- ple times a year. This includes the process and ﬁndings of the double materiality assessment, and speciﬁcally a review of each material impact, risk and opportunity identiﬁed. All material IROs were discussed by the Board 64 65 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE of Directors and Audit Committee in 2024. The Board of Directors also discusses previously established priorities for the year related to the implementation of due diligence and the effectiveness of policies, actions, metrics and targets adopted to address material IROs. Sustainability-related impacts, risks and opportuni- ties are incorporated into Arendals Fossekompani’s risk management process, which informs the Board’s deliberations on strategy and major decisions by the company. In our annual wheel, the double materiality assessment takes place before the annual review of strategy, such that they can be considered in the company’s direction. Where relevant, sustainability-related matters must be assessed against ﬁnancial conditions. As part of this, the instructions to the Board of Directors outline that it should consider establishing plans and goals to ensure that Arendals Fossekompani's business model and strat- egy are compatible with the transition to a sustainable economy, limiting global warming to 1.5 degrees in line with the Paris Agreement and climate neutrality by 2050. GOV-3 INTEGRATION OF SUSTAINABILITY-RELATED PERFORMANCE IN INCENTIVE SCHEMES The Remuneration Policy governs Arendals Fossekompani ASA’s practices on remuneration to the Executive Management and is adopted by the General Assembly. This policy states that variable compensation shall constitute approximately 15-40% of total remuneration. The Executive Management’s variable remuneration is structured in the form of a bonus programme. The determination of the bonus is decided by an assess- ment of the achievement of pre-deﬁned annual per- formance targets. These targets are linked to Arendals Fossekompani’s ﬁnancial results as well as non-ﬁnancial targets linked to our strategy and goals and can be quali- tative and quantitative. The performance-based variable compensation is intended as motivation to achieve better results for Arendals Fossekompani in our most essential areas of activity. The non-ﬁnancial targets are personal and individual and can be linked to Arendals Fossekompani’s strategy and goals, growth in net asset value, speciﬁc sustainability targets and the successful accomplishment of targets for portfolio companies. Arendals Fossekompani’s Chief Sustainability Ofﬁcer’s non-ﬁnancial targets represents 50% of possible performance-based remuneration, which includes targets related to the company’s sus- tainability performance. Non-ﬁnancial targets related to sustainability do not currently include greenhouse gas emissions reduction targets, but rather focus on Arendals Fossekompani’s governance structures and performance in relation to with ESG annual and EU Taxonomy reporting requirements. Incentive schemes are approved and updated by the Board of Directors on an annual basis. Further information is available in Arendals Fossekompani’s Remuneration Report for 2024. GOV-4 STATEMENT ON DUE DILIGENCE Core elements of Arendals Fossekompani's due dili- gence process with regard to sustainability matters are reﬂected throughout the Sustainability Statement. Aspects of Arendals Fossekompani's due diligence embedded in our governance, strategy and business model is described under GOV-2, SBM-3 and G1-1. Our engagement with affected stakeholders in all key steps of the due diligence process can be found in SBM-2, IRO-1, S1-1 and S1-2. The identiﬁcation and assessment of adverse impacts is detailed under IRO-1 and SBM-3, while action taken to address adverse impacts is located under E1-3, E5-2, S1-4 and G1-1. The effectiveness of these efforts and communication as necessary is dis- closed in tracking performance against targets under E1-4, E5-3 and S1-5. GOV-5 RISK MANAGEMENT AND INTERNAL CONTROLS OVER SUSTAINABILITY REPORTING As a group with a wide portfolio of companies across multiple countries, there are inherent risks in collect- ing complete sustainability data, especially related to consistent application of reporting assumptions and the collection of data from upstream and downstream activities and business partners. To best prepare for CSRD and its requirements on our sustainability report- ing, Arendals Fossekompani’s 2023 report began to integrate elements of ESRS. We also contracted a gap analysis on our compliance with the new standards to prepare for the changes ahead. Early and regular dialogue with the individuals responsi- ble for reporting on behalf of the portfolio companies is fundamental to preparing the process for sustainability reporting. Measures such as continuity of the reporting systems used, trainings in those systems, built-in control checks, year-on-year learnings, and quality assurance by external system providers as well as dedicated members of the team have contributed to this year’s risk manage- ment system on sustainability reporting. Further measures are planned for 2025 to continue to improve the quality of our sustainability reporting con- trols, including a dedicated debrief with involved parties, strengthened reporting systems, increased timelines for reporting and updated guidelines. The Board of Directors is ultimately responsible for the integrity of the contents of the sustainability report and considers risks associated to reporting and internal controls annually, as part of its review of the company’s most important risk areas relative to the Group's net asset value or reputation (severity) and likelihood. Our approach to sustainability and sustainability goals SBM-1 STRATEGY, BUSINESS MODEL AND VALUE CHAIN Arendals Fossekompani is the result of responsible choices through generations. We believe that a respon- sible approach to environmental, social and governance is crucial in generating long-term value for shareholders, employees and society. Sustainability is an integral part of our investment strategy, and we work closely with our portfolio companies to enhance our collective ESG performance. Our approach to sustainability spans both phases of our activity as a company: The investment phase: Sustainable and transition ﬁnancing is essential to reach the objectives of the Paris Agreement, as well as supporting agreements like the EU Green Deal. When Arendals Fossekompani screens and sources new companies for M&A, ESG is an essential consideration. Our primary investment universe focuses on B2B companies in sustainable energy and technology sectors, and new investments must contribute, or have a path to contribute, to at least one of the six environmen- tal goals outlined in the EU Taxonomy. The ownership phase: ESG is part of the business value creation process, and at times a key value creation lever for our portfolio companies. We believe in active, long-term, and responsible ownership. We engage with our portfolio companies, including on issues relating to sustainability. As an investor and as an owner, we seek to minimise and mitigate any adverse impacts we may have on ESG matters, both in our own operations and across our value chain where possible. We also seek to promote sustain- ability by contributing to the green transition, to fair and diverse companies and societies, and to responsible and ethical business conduct. We are committed to ensuring the company’s resilience for generations to come, requiring that we closely mon- itor our risks and opportunities related to sustainability, and take action where necessary. The development of a decarbonisation plan and a roadmap for reduced consumption of virgin resources are essential responses in the coming years to our primary strategic sustainabil- ity-related challenges: tackling emissions- and ener- gy-intensive supply chains and moving towards a more circular economy. Own operations and value chain As an investment company, our upstream value chain focuses on identifying and investing in companies at various stages of maturity. These companies depend on a wide variety of business actors supplying and pro- cessing raw materials, manufacturing electronics, data hosting, construction and transportation. At the core of our operations we invest and optimise our portfolio, enabling our companies to advance technologies such as software development, plasma and induction technol- ogies, hydropower generation and property manage- ment. Downstream, we create both ﬁnancial returns and societal impact. Our portfolio companies serve a broad range of customers in sectors such as energy, infrastruc- ture, defence, aerospace and automotive, and collabo- rate with partners in transportation, recycling and waste management. Major changes to the portfolio in 2024 include reducing our ownership in Volue from 60% to 40%, divesting from Vergia and ceasing investment in Commeo. A materiality-based approach Arendals Fossekompani reviews and updates its strategies on sustainability and prioritises efforts therein based on annual double materiality assessments. These assessments include: 1. mapping ESG matters through the value chain, including impacts 2. assessing stakeholders and their focus areas 3. analysing consequences of ESG for the company, including risks and opportunities, and stakeholders and megatrends, and 4. prioritising ESG challenges and identifying KPIs and ambitions, and actions to achieve them. Our sustainability strategy, materiality analyses, stakeholder analyses and sustainability reporting are approved by Arendals Fossekompani’s Board of Directors. The operational implementation of these processes is delegated to our Chief Sustainability Ofﬁcer. Further information on our business model and our portfolio companies' markets and sectors can be found in the SBM-1 tagged section of About Arendals Fossekompani. Arendals Fossekompani's headcount of employees by geographical area is found under S1-6 in S1: Own workforce. 66 67 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Strategic sustainability focus Our four strategic material sustainability topics are: TOPIC S1: OWN WORKFORCE Sub-topics: Working conditions, Equal treatment and opportunities for all With over 1,700 employees globally, Arendals Fossekompani as a group is reliant on our people as our most valuable asset. This dependency on employees’ wellbeing and safety presents a ﬁnancial risk that requires continuous monitoring. We also see an opportunity to continue nurturing diversity and equality throughout the Group’s global workforce. Targets for Arendals Fossekompani Group: • Maximum of 70% of any gender in our workforce by 2027 • Minimum of 40% women in our Executive Management by 2030 • Lost time injury frequency rate of 0 (in effect) • Aggregate sick leave of less than 3.0% (in effect) • Voluntary turnover rate of less than 10% (in effect) TOPIC E5: RESOURCE USE AND CIRCULAR ECONOMY Sub-topic: Resource inﬂow including resource use We rely on the extraction of raw materials upstream, particularly for the production- heavy companies in the Group. New data collected in 2024 is forming the foundation of a new area of work. We aim to establish a baseline for a future target on sustainable resource sourcing by the end of 2025, and a meaningful target in 2026. TOPIC E1: CLIMATE CHANGE Sub-topics: Climate change adaptation, Climate change mitigation and Energy Arendals Fossekompani Group contributes to climate change through our greenhouse gas emis- sions. We also work to combat it, both through our renewable power production and services. If we do not adapt, we are vulnerable to a changing climate. Targets: • Arendals Fossekompani ASA (SBTi validated): to reduce absolute Scope 1 and 2 GHG emissions by 42% by 2030 from a 2021 base year; to actively source 100% renewable electricity every year by 2030; and for 60% of eligible private equity and listed equity portfolio by book value setting SBTi- validated targets by 2027 from a 2021 base year. • NSSLGlobal: to reduce absolute Scope 1 and 2 emissions by 50% by 2035 from a 2020 base year. • Tekna: to reduce absolute Scope 1 and 2 emissions by 50% by 2030 from a 2021 base year. • Arendals Fossekompani Group: to include EU Taxonomy eligibility assessments in all M&A activities and new business ventures by 2025. While absolute emissions targets are essential for businesses to meet the Paris Agreement, our Group’s structure is best represented by collective targets relating to emissions intensity. If Arendals Fossekompani ASA’s emissions reduction target is applied to the Group in terms of emissions intensity, it would be 42% reduction in Scope 1 and 2 emissions intensity by 2030 from a 2021 baseline. We have begun to monitor the Group’s progress in these terms this year as outlined in E1: Climate change. TOPIC G1: BUSINESS CONDUCT Sub-topics: Corporate culture, Corruption and bribery, Cyber security With own operations in 21 countries and sourcing from many more, the Arendals Fossekompani Group is exposed to corruption risks in business conduct and general risks of breaches to our corporate conduct that require ongoing focus. We are also a potential target for cyber-attacks, which demand sophisticated prevention and strong internal controls. Targets: • 100% of the workforce has signed the Code of Conduct by 2025 • 100% of the workforce has received training in the Code of Conduct by 2025 • 100% of ‘high-risk’ partners have signed the Business Partner Code of Conduct by 2027 • All whistleblowing cases are handled within less than 3 months by 2025 • 0 convictions of violation of anti-corruption or anti-bribery laws per year (in effect) The targets listed have been approved by the Arendals Fossekompani Board of Directors and align with UN SDGs 5, 7, 8, 9, 12 and 13, the Paris Agreement, the OECD’s Business Guidelines on Responsible Business Conduct, and the UN Global Compact’s Ten Principles. In accordance with CSRD, we report on sustainability in a consolidated manner, including all portfolio companies comprised in our consolidated ﬁnancial statements. However, when it comes to ESG strategy and implemen- tation, we are more targeted. Each company faces different impacts, risks and opportunities, and is charged with managing its own ESG approach, beyond overarching targets and KPIs set at the Group level. SBM-3 MATERIAL IMPACTS, RISKS AND OPPORTUNITIES AND THEIR INTERACTION WITH STRATEGY AND BUSINESS MODEL Double materiality assessment We have conducted a double materiality assessment (DMA) as outlined in the ESRS and implementation guidance from EFRAG. In the DMA, we have thoroughly analysed our effects on the environment and society, alongside evaluating the ﬁnancial risks related to sus- tainability, and the opportunities we actively pursue. Overview of material IROs Based on the double materiality assessment (DMA) of 2024, Arendals Fossekompani has identiﬁed the following material impacts, risks and opportunities (IROs) relating to sustainability matters. Together, these IROs inform our sustainability approach and priorities, including our targets, actions, and policies and the data collected from across our portfolio. Our sustainability reporting follows our ﬁnancial statements’ consolidation such that Volue’s end-of-year data is not included. As a result, Arendals Fossekompani Group reports over 1,700 employees in 21 countries rather than over 2,500 employees in 25 countries. Any cumulative data includes ﬁgures from Volue during the period Arendals Fossekompani was a majority owner. 68 69 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE IRO Type IRO Name Description ENVIRONMENT E1 Climate change Risk Vulnerability to climate change disruptions Parts of our physical operating environments and supply chains could be affected by climate change. This is primarily a physical risk. (UVC + OO) Negative impact Emission of greenhouse gases (GHG) Contribution to climate change through the Group's collective emission of GHGs from production facilities, ofﬁces and transportation (Scope 1 and 2), and more signiﬁcantly, the emissions resulting from the use of some companies’ sold products and other emissions in the value chain (Scope 3). (UVC + OO + DVC) Risk Increased costs related to mandates and regulation Increasing sustainability regulations related to our portfolio's products and services could lead to increased costs to comply with new regulation. Meeting new regulatory requirements might require signiﬁcant investments in technology, processes, personnel, data collection and reporting. (OO) Risk Unsuccessful investments in new technologies We are active in sectors that rely on staying at the forefront of technological advancements related to a Net Zero transition, making us susceptible to the challenges posed by rapid development. Arendals Fossekompani faces a risk of unsuccessful investments in new technologies. (OO) Positive impact Optimisation and production of renewable energy We have a positive impact on clean energy supply through optimisation of customers' energy production and the production of renewable energy. (OO + DVC) Opportunity Demand for solutions related to renewable energy With an increasing share of renewable energy in the energy system, the demand for software services like market demand and production forecasting, trading software and grid monitoring will be increasingly important, and can provide opportunities for growth. (OO) Negative impact Consumption of energy We consume energy at our production sites, in our ofﬁces, through transportation and across our value chain. (UVC + OO) E5 Circular economy and resource use Negative impact Extraction of raw materials The production and construction activities in our portfolio consume raw materials. In so doing, our value chains contribute to extractive, rather than circular, economies. (UVC + OO) SOCIAL S1 Own workforce Risk Dependency on workforce wellbeing Our own workforce is our greatest asset; if they are unhappy or unwell, we risk losing them or their ability to create value for the Group. (OO) Opportunity Gains from a diverse workforce Our workforce stands to gain from further enhancing its diversity and inclusivity. We see an opportunity at all levels of the Group to beneﬁt from varied perspectives and ensure employees are treated equally. (OO) GOVERNANCE G1 Business conduct Risk Dependency on corporate culture Any breaches or incidents relating to our corporate culture would cause reputational damage to the Group. This could be related to transparency requirements, mismanagement, general business ethics. Such breaches could lead to employee, customer, and investor dissatisfaction. (OO) Risk Incidence of corruption Although the likelihood of corruption is considered low given our strict application of the CoC and corporate ethics, the reputational impact would be high given the way it would reﬂect on our integrity. If an incident occurred in relation to sensitive or governmental contracts, this would be highly damaging. (OO) Entity- speciﬁc Risk Exposure to critical cyber-attacks Critical cyber-attacks are a risk across some of our operations, given our infrastructure in producing energy and handling sensitive materials, as well as through our online operations including software generation and client-facing services. (OO) UVC = upstream value chain OO = own operations DVC = downstream value chain Note Changes in material topics from previous years are the removal of biodiversity and inclusion of resource inﬂows (circularity) as material topics. Other material topics from 2023 have been renamed in accordance with CSRD naming conventions. Impact, risk and opportunity management IRO-1 DESCRIPTION OF THE PROCESS TO IDENTIFY AND ASSESS MATERIAL IMPACTS, RISKS AND OPPORTUNITIES Our methodology and assumptions The methodology used observed the principles and steps outlined in the ESRS, is adapted to Arendals Fossekompani as follows: Year-on-year changes Given Arendals Fossekompani’s business activities and M&A activity in 2024 in relation to previous years, it was assumed that the material topics and impacts, risks and opportunities (IROs) identiﬁed in previous years would still be applicable. This informed the process taken in 2024, which started with a review of historical materials to develop our updated value chain and associated IROs. The stakeholder engagement undertaken in 2024 was therefore conducted at the end of the process and used as a validation of the DMA’s ﬁndings. With the new requirement to comply with the demands of ESRS, several methodological changes were imple- mented in 2024 building on the preliminary efforts to become CSRD ready in 2023: • Scope: A more comprehensive approach to including the entirety of the Arendals Fossekompani Group was applied in 2024. For the ﬁrst time, our upstream and downstream value chain have been considered in the scope of the assessment. • Scoring methodology: A new scoring rubric on impacts, and a reﬁned scoring rubric on risks and opportunities, were introduced in 2024. • Hybrid approach: 2024 saw greater involvement of our portfolio companies for a hybrid ‘bottom-up’ and ‘top-down’ approach, leaning more on their knowledge and insights. Group consolidation As a diversiﬁed Group with a wide-ranging portfolio of companies, it was important that IROs were identiﬁed at the portfolio company level, but scored and assessed in relation to the Group. All IROs were positioned as Group IROs, and where a similar IRO occurred multiple times across the portfolio, it was aggregated. Companies in our portfolio were weighted differently in these aggregations, depending on the company’s foot- print on people, the environment and its ﬁnancial bearing on Arendals Fossekompani Group. For an impact, the size of its workforce, whether the company manufactures physical goods, and the magnitude of its operations and the industries it contributes to were considered. For a ﬁnancial risk or opportunity, a company’s revenue and effect on the Group’s net asset value were used to prior- itise companies with a large potential upside or ﬁnancial burden on the Group. Unknowns in the value chain More information is available within our own operations than in our upstream and downstream value chains. In the absence of information, assumptions were made, informed by sector- or geography-speciﬁc expectations or estimates. These have been outlined in the topic-speciﬁc chapters below. Scoring Once a long list was developed, every impact, risk and opportunity (IRO) was scored against a pre-determined scoring rubric. The following methodologies and assumptions were applied: • Impacts were scored on scale, scope, irremediability (for negative impacts only) and likelihood. For actual impacts, a score of 5 was assigned on likelihood. Collectively, the factors of scale and scope (and where applicable, irremediability) were averaged into a severity score. • Risks and opportunities were scored on ﬁnancial consequence and likelihood. • Each IRO’s severity and likelihood scores were multiplied to generate the total score per IRO. A maximum of 25 (the product of 5 on severity and 5 on likelihood) could be achieved. • IROs were also classiﬁed according to their time horizon (short-, medium- and long-term as deﬁned by ESRS, referring to less than one year from now, one to ﬁve years from now, and beyond ﬁve years, respectively), as well as where they occur in the value chain (upstream, in our own operations, or downstream). Where an IRO appears to be irrespec- tive of time horizon (for instance, where it is possible to say “it could happen at any moment”), this was deemed to be short term. 70 71 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Materiality threshold Out of a total possible score of 25, a threshold of 12 was applied to IROs, distinguishing between IROs that are immaterial (scoring between 0-11.99) and those that are material (scoring between 12-25). Materiality therefore represents the convergence of high or very high severity and likelihood. For IROs that were just below the mate- riality threshold, a qualitative review was undertaken to ensure the assessment was correct. THE PROCESS IN 2024 Identifying IROs The process to identify IROs gathered inputs from several channels. 1. Historical materials Historical materials were gathered, including earlier materiality assessments conducted by Arendals Fossekompani, our portfolio companies and peers, formal and informal stakeholder engagements conducted in the past, sector-speciﬁc informa- tion and previous years’ details in annual reports, Transparency Act Reports, strategy documents, and organisational charts from across the portfolio. These materials were reviewed in light of any changes or updates to signiﬁcant suppliers and customers, geog- raphies, or any part of Arendals Fossekompani's value chain. 2. Company-speciﬁc workshops Workshops with each portfolio company were held, with the company’s ownership team (comprised of member(s) of the company’s Board of Directors and business analysts at Arendals Fossekompani ASA) and/or the company’s ESG representatives. Members of the Arendals Fossekompani ASA ﬁnance team were involved or consulted for each. 3. Inputs from ongoing due diligence and special projects in 2024 Inputs on impacts included ﬁndings from supplier risk assessment surveys as well as due diligence exercises relating to health and safety in the work- place. On risks and opportunities, inputs included a dedicated climate risk assessment conducted in 2024 to update ﬁndings from 2021. This is described in greater detail under chapter E1. These inputs were then compiled and mapped to the relevant ESRS sub-topics. To arrive at a long list of IROs for Arendals Fossekompani Group, IROs that arose from across the portfolio were summarised and described in relation to the Group. Assessing and prioritising IROs Every IRO was scored against the pre-deﬁned rubrics. Scoring was conducted by several members of Arendals Fossekompani’s Sustainability team independently, before comparing scores and coming to an agreement, to minimise biases and errors. Scores were reviewed with senior leadership or relevant experts in the team, and certain scores were revisited over the course of the DMA to ensure that the IROs were assessed consistently with one another. Monitoring IROs Reviews at key points throughout the year are import- ant to ensure our IROs remain accurate and relevant. Material IROs are monitored through data collection, and where relevant the development of targets, KPIs and actions. E1: To identify our climate impacts, we track our GHG emissions by monitoring direct emissions and energy consumption across our sites, as well as emissions from our upstream and downstream value chain through supplier data, activity data, and ﬁnancial data. Potential impacts are considered in light of prospective changes to the portfolio. To identify our climate-related risks and opportunities, a climate risk assessment was conducted in 2024. In this assessment, we utilised two distinct scenarios: a high-emission scenario, 'Fossil-fuelled Development (SSP5-8.5),' from the Intergovernmental Panel on Climate Change (IPCC), and a low-emission/transition scenario, 'Net Zero 2050' from the Network for Greening the Financial System (NGFS). The high-emission sce- nario anticipates increased physical risks due to climate change, such as the likelihood of extreme weather events. Conversely, the Net Zero 2050 scenario assumes the 1.5°C target is met and considers key assumptions like the swift introduction of ambitious climate policies such as carbon and energy pricing and rapid technology development, and is associated with heightened transi- tional risks, including escalating costs associated with GHG emissions reduction. The two scenarios chosen to assess climate risks and opportunities represent the extremes of global warming. Climate risks were assessed for sub-groups of our portfolio based on business activity types, distinguish- ing between our hydropower operations, companies working on electriﬁcation and materials (Tekna and ENRX), companies working on digitalisation and big data analytics (NSSLGlobal and Alytic), and property. This approach was taken as risks and opportunities identiﬁed often affect all businesses in a similar sector or business model. For physical risks, this was supported by an assessment of climate hazards at the asset level, and our exposure to physical risks was assessed in accordance with the European Green Taxonomy requirements. The time horizons selected were 2030 (2021-2040), 2040 (2031- 2050), 2050 (2041-2070) and 2085 (2071-2099), which are all considered long-term risks according to the time horizons applied in our DMA, as climate risks and oppor- tunities were also categorised into short-, medium- or long-term horizons as deﬁned in our DMA. This aligns with our strategic planning horizons and capital alloca- tion plans. Our assets' lifetime all fall into the long-term horizon. The list of climate hazards used complies with the requirements of the list in the appendix A of Annex I of the European Green Taxonomy. Before assessing climate risks, each climate hazard was deﬁned and classiﬁed according to its type of impact on each eligible economic activity. A climate event is also deﬁned to describe the exposure to each climatic hazard. For each applicable hazard, climate indicators are selected to measure exposure to the climate hazard for the deﬁned event. An absolute level of exposure is determined by comparison to physical thresholds. The following climate hazards were excluded from the analysis as they were not consid- ered material for the economic activities and locations of our assets: Temperature-related (permafrost thawing), wind-related (tornado), water-related (ocean acidiﬁca- tion, saline intrusion), solid mass-related (coastal erosion, soil degradation, soil erosion, soil ﬂuctuation, avalanche). Transitional risks, which arise from the shift towards a lower-carbon economy, are particularly pertinent to the Net Zero scenario. Transitional risks considered include risks associated with changes in climate policies, regulations, and legal standards (policy and legal risks), risks related to the pace and direction of technological innovation and adoption (technology risks), risks that emerge from changing market dynamics, such as shifts in consumer preferences or supply chain adjustments (market risks), and risks linked to the company's stand- ing among stakeholders, particularly if it fails to align with the evolving expectations around sustainability (reputational risks). The equivalent assessment was also conducted for opportunities. While locked-in GHG emissions have not been assessed, thus far no assets or business activities have been assessed as incompatible with the transition to a climate-neutral economy. Note 26 of the ﬁnancial statements draws from the same climate assumptions and scenarios in considering climate-related risks. E5: Given the absence of data across much of our value chain, Arendals Fossekompani did not screen the portfolio’s assets and activities in order to identify actual IROs. Instead, the double materiality assessment’s approach to circularity has been founded on assump- tions. These were based on publicly available resources on resource ﬂows by sector or by technology, as well as strategic and operational questionnaires for busi- nesses on circular business models (sources included the European Commission, Circulytics, and the Ellen Macarthur Foundation). The double materiality assess- ment’s ﬁndings were informed by discussions with the portfolio companies’ leadership, sustainability leads, and/or procurement representatives. No consultations were conducted with affected communities related to resource use and circular economy. Note Impacts related to human rights were assessed carefully to prevent any oversight of severe human rights violations on the basis that it has a low likelihood of occurrence. To achieve this, human rights-related impacts' severity took precedence over their likelihood in assessing their materiality. 72 73 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE G1: In identifying impacts, risks and opportunities relat- ing to business conduct matters, particularly relevant criteria considered included the country of operation and their associated risks such as the Transparency International Corruption Perceptions Index. We also examined the industries served by the Group, where governmental contracts were perceived to be highly sensitive. Additionally, we leveraged resources from bodies like the European Commission to assess supply chain governance risks such as rule of law and corrup- tion control, focusing particularly on countries of origin for our raw materials. Managing the DMA Our DMA is executed by Arendals Fossekompani’s Sustainability team, led by our Chief Sustainability Ofﬁcer, and consults and is validated by our Management. The Board of Directors’ Audit Committee, followed by the Board of Directors, approves the DMA’s methodology and ﬁndings. To ensure the completeness and relevance of the assessment and its ﬁndings, we are in continuous dia- logue with our auditors, peers, and attend courses and educational sessions to remain informed on the regula- tory requirements. DMA workshops within the company started with an overview of the requirements of CSRD in terms of the scope and topics covered, to ensure inputs into the assessment were as thorough and informed as possible. The Audit Committee validates the accuracy and reliabil- ity of the ﬁndings through its oversight of the methodol- ogy and process applied. In 2024, the DMA and the general risk assessment were conducted separately, although both referred to the other process’s inputs and ﬁndings. Moving forward, we intend to consolidate efforts by fully merging the process to identify and assess Arendals Fossekompani’s IROs including non-sustainability risks and opportunities. Already in 2024, the DMA’s ﬁndings, particularly relating to risks, are managed in accordance with the Group’s broader risk management process. Sustainability- related risks are considered equal to other risks and con- tribute to the annual update to Arendals Fossekompani’s risk proﬁle. The same scoring rubric is used for all risks, so the rubric used to score non-sustainability risks and opportunities was updated as well in 2024. The DMA will be revised on an annual basis moving forward. SBM-2 INTERESTS AND VIEWS OF STAKEHOLDERS In our strategy and business model, we continuously consider the interests and views of stakeholders in relation to sustainability matters. Engaging with stake- holders provides us with a representative overview of their sustainability expectations and concerns and gives a solid basis for assessing our material impacts, risks and opportunities. The external stakeholder groups for Arendals Fossekompani include investors, customers, suppliers, regulators, NGOs and the local community. The internal stakeholders involved include employees, Board of Directors and representatives from our portfolio companies. The method of engagement with stakeholders varies from year to year and between different stakeholders. The DMA conducted in 2024 updated and expanded materiality assessments in previous years. Insights from prior dialogue and ﬁndings were incorporated into this year’s stakeholder engagement process. Additionally, our Sustainability team conducted semi-structured interviews with a selection of external stakeholders, spe- ciﬁcally asking them to give input on our IROs and more general our sustainability efforts. The interviews held in 2024 were conducted at the end of the process and used as a validation of the DMA’s ﬁndings. Also, throughout the year we regularly engage with stakeholders through e-mails and meetings, seminars and informal conver- sations, and receive valuable feedback from investors, regulators, and NGOs on a corporate level. Internal stakeholders were involved in various workshops and meetings throughout the DMA project process. Our employees' interests, perspectives, and rights are central to informing our strategy and business model, especially as the importance of attracting and building teams and talent is anchored in our strategy as an owner. The skills and expertise of our workforce drive our strat- egy, decision-making processes, and overall productivity and value creation. Arendals Fossekompani continuously assesses relevant data and insights such as employee or whistleblower cases and formal and informal employee engagement to understand the views and interests of our workforce, and to identify potential or actual adverse impacts on human and labour rights. In most parts of the Group, annual professional development conversations with employees ensure that every individual has access to the conditions they need to perform their work and grow in the company. Process on immaterial environmental topics: E2, E3 and E4 The Arendals Fossekompani ASA Sustainability team, alongside the members of the portfolio company workshops identifying IROs for each company, screened the business activities and sites of every part of the portfolio to identify potentially impactful activities or sites in relation to these topics. Affected communities were not consulted in this process in 2024, so diagrams from relevant external sources were used as prompts for consideration in workshops. Speciﬁcally, the following tools were used: • The Stockholm Environment Institute and Climate and Clean Air Coalition’s diagrams on the typical sources of pollution across the value chain, as well as common pollutants to consider • The World Wildlife Fund and the UN Biodiversity Lab’s mapping of global prevalence of water stress and water risk, including scarcity, ﬂooding, and quality of water • The World Wildlife Fund’s Biodiversity Risk Filter indicators as applied to the sectors in which Arendals Fossekompani is active or reliant on, and the UN Biodiversity Lab’s mapping of areas of global signiﬁcance for biodiversity conservation, and ecologically or biologically signiﬁcant marine areas Relating to biodiversity, ﬁndings from the 2023 materiality assessment and ensuing data collection across the Arendals Fossekompani Group were reviewed as core inputs into the double materiality assessment in 2024. Of the Group’s 70 operational sites in 2023, three were considered adjacent to protected areas or areas of high biodiversity value. The potential impacts, risks (arising from dependencies) or opportunities assessed in relation to our sites were eventually deemed immaterial in this year’s assessment. Data on sites in the value chain beyond our own operations was not available, so the resources listed above were relied upon to estimate and assess potential upstream or downstream impacts on, or risks or opportunities relating to, biodiversity. As any possible dependency on biodiversity and ecosystems is considered to present a ﬁnancial risk to the company, the same assessment criteria for risks apply to dependencies. No material impacts were identiﬁed. In principle, transition, physical and systemic risks and opportunities were in scope of the assessment, though none were identiﬁed as material either. CLIMATE SCENARIOS USED Fossil-Fuelled Development SSP58.5 Net Zero 2050 Overview and implications Climate-amplifying effects lead to faster degradation of climate and nature than expected. Extreme weather events, includ- ing ﬂoods, wildﬁres, and heatwaves, will claim millions of lives worldwide. However, Norway is still better off than many other countries, as the oil and gas production continues. There is a low degree of energy efﬁciency and little focus on the develop- ment of renewable energy. Fear of collapse, increasing demands for action, inﬂuence from science, and new economic thinking triggered radical change from the mid-2020s. International coopera- tion is strong to reach the 1.5°C target: rapid and ambitious transition, immediate intro- duction of climate regulations, legislation, and innovation. Norway must achieve net zero by 2043 and thereafter be net negative, which has signiﬁcant implications for the energy system and nature restoration. Assumptions Scenario provider IPCC AR6 NGFS GDP growth High High Technology development and change Rapid, directed toward fossil fuels Rapid, directed toward renewable International cooperation Effective for development, limited for environment Strong towards rapid change Environmental (and energy policy) Focus on local environment, little concern with global problems Improved management of local and global issues; tighter regulation of pollutants 2030 2050 2100 2030 2050 2100 Global warming (°C) 1.7 2.4 4.4 1.4 1.6 1.4 Change in mm of annual precipitation (%, median value) +9 +12 +4 +4 Energy price (øre/kWh) 67 57 42 45 CO 2 -price (NOK/tonne) 800 1,752 2,997 8,658 74 75 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE How key stakeholders inform our strategy and business model Stakeholder group Arena for dialogue Purpose of engagement Examples of outcome of engagement INTERNAL STAKEHOLDERS Arendals Fossekompani’s Board of Directors • Board meetings • Align sustainability efforts with strategy and business model • Inform the Board about views and interests of affected stakeholders with regards to sustainability- related IROs • Setting ambition level for sustainability efforts • Approval of the DMA, targets and actions Employees • Employee development talks • Employee satisfaction surveys, workplace assessments, and town halls • Employment relations and occupational health and safety representatives • Explore how employees view their roles, experiences, obstacles, and ideas for enhancement • Promote awareness of internal policies and updates • Foster a sustainable workplace and work environment, including physi- cal and mental health and safety • Enhance employee retention and recruitment • Action plans for improvement • Implementation of new processes • Addressing concerns raised about potential breach of Code of Conduct • Feedback on the selection of sustainability topics Representatives from portfolio companies • Board meetings • Workshops • Quarterly sustainability meetings across the group • Align on sustainability efforts, KPIs and expectations • Feedback on the selection of sustainability topics EXTERNAL STAKEHOLDERS Investors • Meetings • Quarterly updates • Company presentations and annual general meetings • Identify investor concerns and respond to inquiries • Present portfolio developments • Establish trust and demonstrate our long-term value creation • Engage in discussions about performance, risk management, and strategic direction • Improved alignment of strategy with shareholders Views and feedback on our sustainability efforts and sustainability topics Suppliers • Regular meetings and e-mails • Data collection requests • Seminars, webinars and conferences • Risk assessments • Collaborate on improved sustainability outcomes • Inform IROs and possible actions • Inputs on sustainability efforts to supply chain • Supporting access to quality sustainability data Customers • Regular meetings and e-mails • Seminars, webinars and conferences • Risk assessments • Customer surveys • Map customers’ greatest challenges and opportunities associated with sustainability • Inform about sustain- ability expectations • Inputs on sustainability efforts to products and services • Supporting the sustainable transformation of customers • Views on the selection of sustainability topics Regulators and policy makers • Reporting requirements • Audits • Ensure compliance with legislation • Operate in line with expectations from greater society • Inputs to sustainability strategy NGOs • Regular meetings and e-mails • Seminars, webinars and conferences • Operate in line with expectations from greater society • Provide inputs on legislation and peers The local community • Through portfolio companies • Information meetings • Exercise local commitment and local presence • Operate in line with expectations from greater society • Views on our work as an investor, our IROs and the selection of sustainability topics In 2024, no adjustments were made to our material IROs based on the external interviews, as the information provided validated our existing ﬁndings. Several adjustments were made based on internal discussions and workshops. We removed and added sub-topics and also re-scored some IROs based on new information. IRO-2 ESRS INDEX Code Disclosure Requirement Page in the Annual Report BP-1 General basis for preparation of sustainability statements 64 BP-2 Disclosures in relation to speciﬁc circumstances 64 GOV-1 The role of the administrative, management and supervisory bodies 65 GOV-2 Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies 65 GOV-3 Integration of sustainability-related performance in incentive schemes 66 GOV-4 Statement on due diligence 66 GOV-5 Risk management and internal controls over sustainability reporting 66 SBM-1 Strategy, business model and value chain 20, 67 SBM-2 Interests and views of stakeholders 75 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model 69, 82, 92, 118, 128, 130 IRO-1 Description of the process to identify and assess material impacts, risks and opportunities 71 IRO-2 Disclosure requirements in ESRS covered by the undertaking’s sustainability statement 77 E1.GOV-3 Integration of sustainability-related performance in incentive schemes 66 E1-1 Transition plan for climate change mitigation 86 E1.SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model 82 E1.IRO-1 Description of the processes to identify and assess material climate-related impacts, risks and opportunities 72 E1-2 Policies related to climate change mitigation and adaptation 83 E1-3 Actions and resources in relation to climate change policies 86 E1-4 Targets related to climate change mitigation and adaptation 84 E1-5 Energy consumption and mix 87 E1-6 Gross Scopes 1, 2, 3 and Total GHG emissions 88 E5.IRO-1 Description of the processes to identify and assess material resource use and circular economy-related impacts, risks and opportunities 73 E5-1 Policies related to resource use and circular economy 92 E5-2 Actions and resources related to resource use and circular economy 92 E5-3 Targets related to resource use and circular economy 92 E5-4 Resource inﬂows 93 S1.SBM-2 Interests and views of stakeholders 75 S1.SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model 118 S1-1 Policies related to own workforce 118 S1-3 Channels for own workforce to raise concerns 120 S1-4 Taking action on material impacts on own workforce, and approaches to managing material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions 120 S1-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities 121 S1-6 Characteristics of the undertaking’s employees 122 S1-7 Characteristics of non-employees in the undertaking’s own workforce 123 S1-8 Collective bargaining coverage and social dialogue 123 S1-9 Diversity metrics 124 S1-10 Adequate wages 124 S1-11 Social protection 124 S1-12 Persons with disabilities 124 S1-13 Training and skills development metrics 124 S1-14 Health and safety metrics 124 S1-15 Work-life balance metrics 125 S1-16 Remuneration metrics (pay gap and total remuneration) 125 G1.GOV-1 The role of the administrative, supervisory and management bodies 65 G1.IRO-1 Description of the processes to identify and assess material impacts, risks and opportunities 75 G1-1 Business conduct policies and corporate culture 128 G1-3 Prevention and detection of corruption and bribery 129, 130 G1-4 Incidents of corruption or bribery 130 76 77 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE DATAPOINTS THAT DERIVE FROM OTHER EU LEGISLATION Disclose requirement Data- point SFDR refer- ence Pillar 3 refer- ence Benchmark regulation referance EU Cli- mate Law reference Annual report reference ESRS 2 GOV-1 21 (d) Board’s gender diversity Corporate Governance: Board of Directors ESRS 2 GOV-1 21 (e) Percentage of Board Members who are independent Corporate Governance: Board of Directors ESRS 2 GOV-4 30 Statement on due diligence paragraph General information: Governance ESRS 2 SBM-1 40 (d) i Involvement in activities related to fossil fuel activities Not material ESRS 2 SBM-1 40 (d) ii Involvement in activities related to chemical production Not material ESRS 2 SBM-1 40 (d) iii Involvement in activities related to controversial weapons Not material ESRS 2 SBM-1 40 (d) iv Involvement in activities related to cultivation and production of tobacco Not material ESRS E1-1 14 Transition plan to reach climate neutrality by 2050 E1 Climate Change: Transition planning ESRS E1-1 16 (g) Undertakings excluded from Paris-aligned Benchmarks Not relevant ESRS E1-4 34 GHG emission reduction targets E1 Climate Change: Targets ESRS E1-5 38 Energy consumption from fossil sources disaggregated by sources (only high climate impact sectors) E1 Climate Change: Energy consumption and mix ESRS E1-5 37 Energy consumption and mix E1 Climate Change: Energy consumption and mix ESRS E1-5 40-43 Energy intensity associated with activities in high climate impact sectors paragraphs E1 Climate Change: Energy consumption and mix ESRS E1-6 44 Gross Scope 1, 2, 3 and Total GHG emissions E1 Climate Change: Gross Scopes 1, 2, 3 and Total GHG Emissions ESRS E1-6 53-55 Gross GHG emissions intensity E1 Climate Change: Gross Scopes 1, 2, 3 and Total GHG Emissions ESRS E1-7 56 GHG removals and carbon credits Not material ESRS E1-9 66 Exposure of the benchmark portfolio to climate-related physical risks Subject to phase-in ESRS E1-9 66 (a), 66 (c) Disaggregation of monetary amounts by acute and chronic physical risk, Location of signiﬁcant assets at material physical risk Subject to phase-in ESRS E1-9 67 (c) Breakdown of the carrying value of its real estate assets by energy-efﬁciency classes Subject to phase-in ESRS E1-9 69 Degree of exposure of the portfolio to climate- related opportunities Subject to phase-in ESRS E2-4 28 Amount of each pollutant listed in Annex II of the E- PRTR Regulation (European Pollutant Release and Transfer Register) emitted to air, water and soil Not material ESRS E3-1 9 Water and marine resources Not material ESRS E3-1 13 Dedicated policy Not material ESRS E3-1 14 Sustainable oceans and seas Not material ESRS E3-4 28 (c) Total water recycled and reused Not material ESRS E3-4 29 Total water consumption in m 3 per net revenue on own operations Not material ESRS 2 SBM3 - E4 16 (a) Disclosure of activities negatively affecting biodiversity sensitive areas Not material ESRS 2 SBM3 - E4 16 (b) Material negative impacts with regards to land degradation, desertiﬁcation or soil sealing have been identiﬁed Not material ESRS 2 SBM3 - E4 16 (c) Own operations affect threatened species Not material ESRS E4-2 24 (c) Sustainable oceans / seas practices or policies Not material ESRS E4-2 24 (d) Policies to address deforestation Not material ESRS E5-5 37 (d) Non-recycled waste Not material ESRS E5-5 39 Hazardous waste and radioactive waste Not material ESRS 2 SBM3 - S1 14 (f) Risk of incidents of forced labour Not material ESRS 2 SBM3 - S1 14 (g) Risk of incidents of child labour Not material ESRS S1-1 20 Human rights policy commitments Not material ESRS S1-1 21 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8 S1 Own workforce: Policies related to own workforce ESRS S1-1 22 Processes and measures for preventing trafﬁcking in human beings Not relevant ESRS S1-1 23 Workplace accident prevention policy or management system S1 Own workforce: Policies related to own workforce ESRS S1-3 32 (c) Grievance/complaints handling mechanisms S1 Own workforce: Channels for own work- force to raise concerns ESRS S1-14 88 (b), 88 (c) Number of fatalities and number and rate of work-related accidents S1 Own workforce: Health and safety metrics ESRS S1-14 88 (e) Number of days lost to injuries, accidents, fatalities or illness S1 Own workforce: Health and safety metrics ESRS S1-16 97 (a) Unadjusted gender pay gap S1 Own workforce: Remuneration metrics ESRS S1-16 97 (b) Excessive CEO pay ratio S1 Own workforce: Remuneration metrics ESRS S1-17 103 (a) Incidents of discrimination Not material ESRS S1-17 104 (a) Non-respect of UNGPs on Business and Human Rights and OECD Guidelines Not material ESRS 2 SBM3 - S2 11 (b) Signiﬁcant risk of child labour or forced labour in the value chain Not material ESRS S2-1 17 Human rights policy commitments Not material ESRS S2-1 18 Policies related to value chain workers Not material ESRS S2-1 19 Non-respect of UNGPs on Business and Human Rights principles and OECD guidelines Not material ESRS S2-1 19 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8 Not material ESRS S2-4 36 Human rights issues and incidents connected to its upstream and downstream value chain Not material ESRS S3-1 16 Human rights policy commitments Not material ESRS S3-1 17 Non-respect of UNGPs on Business and Human Rights principles and OECD guidelines Not material ESRS S3-4 36 Human rights issues and incidents Not material ESRS S4-1 16 Policies related to consumers and end-users Not material ESRS S4-1 17 Non-respect of UNGPs on Business and Human Rights and OECD guidelines Not material ESRS S4-4 35 Human rights issues and incidents Not material ESRS G1-1 10 (b) United Nations Convention against Corruption Not relevant ESRS G1-1 10 (d) Protection of whistleblowers G1 Business conduct: Policies related to business conduct ESRS G1-4 24 (a) Fines for violation of anti- corruption and anti-bribery laws G1 Business conduct: Policies related to business conduct ESRS G1-4 24 (b) Standards of anti- corruption and anti- bribery G1 Business conduct: Policies related to business conduct 78 79 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 E1 Climate change 82 E5 Resource use and circular economy 92 EU Taxonomy 94 Environment 80 81 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE E1 Climate change As an industrial investment company focused on energy transition and technology, we are committed to the long-term development of our portfolio while reducing our negative environmental impact. At the same time, Arendals Fossekompani plays a role in climate change mitigation through our companies that offer solutions to environmental challenges and renewable energy production. SBM-3 MATERIAL IMPACTS, RISKS AND OPPORTUNITY Climate Change adaptation and mitigation Material risk: Vulnerability to climate change disruptions (acute/chronic physical risk) In a high-emissions scenario, some of our physical operating environments and global supply chains are vulnerable and exposed to disruptions caused by climate change. Climate hazards could cause damage to our portfolio’s property, increased costs of maintenance and reconstruction, or production delays due to downtime in assets. Some of our portfolio companies are exposed to global value chains, with dependencies on the supply of raw materials such as titanium and copper. Supply disruptions could cause production delays or increase cost bases. Our hydropower business is upgrading its infrastructure to cope with larger potential ﬂoods. Other portfolio companies are diversifying their supply chains to remain ﬂexible in response to emerging events includ- ing climate-related challenges. Time horizon: Long term Location in value chain: Upstream value chain, own operations Material negative impact: Emission of greenhouse gases (GHG) across value chain Scope 1 and 2 emissions: The Group's production facili- ties, ofﬁces and transportation contribute to the release of greenhouse gases that lead to climate change. Scope 3 emissions: In addition, Scope 3 emissions repre- sented 99% of our total GHG emissions in 2024, largely given our portfolio’s sale of products that, when used by customers around the world, require electric energy to use. If this electric energy is not generated by renewable sources, it causes GHG emissions. The second largest contributor to our Scope 3 emissions is the carbon foot- print of our purchased goods and services. The largest emitters in our Group are the manufactur- ing companies in our portfolio, both in their own oper- ations and in their value chain. Collectively, Arendals Fossekompani’s Scope 1, 2 and 3 GHG emissions intensity was 119 tCO2e/million NOK in 2024. We have committed to pursuing decarbonisation levers to reduce our Scope 1 and 2 emissions intensity, and to set equiva- lent targets in relation to our Scope 3 emissions. Time horizon: Short term Location in value chain: Upstream value chain, Own operations, Downstream value chain Material risk: Increased costs related to mandates and regulation (policy and legal risk) In a low-emissions scenario, meeting new regulatory requirements might require signiﬁcant investments in technology, processes, personnel, data collection and reporting. If left unmitigated, Arendals Fossekompani is exposed to the risk of legal action or ﬁnancial penalties for non-compliance, potentially leading to substantial ﬁnancial and reputational damage, affecting investor conﬁdence and market positioning. An example of this ﬁnancial impact is the mitigating upgrade of AFK Vannkraft's dams of NOK 297 million by 2027 (CapEx), in response to regulatory requirements for climate change adaptation. Time horizon: Short term Location in value chain: Own operations Material risk: Unsuccessful investments in new technologies (technology risk) In a low-emissions scenario, the pace of technological development is anticipated to accelerate signiﬁcantly. One of the primary risks is the potential for investments in technology to become obsolete at a faster rate. As new technologies emerge and evolve, previously cutting-edge solutions may quickly become outdated, rendering prior investments ineffective or redundant. As Arendals Fossekompani invests in companies facing this risk, we are exposed to the possibility of unsuccessful investments in and by portfolio companies, which might impact our net asset value. Time horizon: Short term Location in value chain: Own operations Energy Material positive impact: Optimisation and production of renewable energy We have a positive impact on clean energy supply through optimisation of customers' energy production and the production of renewable energy. Volue’s market-leading products optimise energy production, trading, distribution and consumption, while in 2024, AFK Vannkraft produced 606.6 GWh of renewable energy, serving an estimated 30,000 households in southern Norway, and Arendals Fossekompani is expanding its local renewable energy capacity for increased production from 2026. Time horizon: Short term Location in value chain: Own operations Material opportunity: Demand for solutions related to renewable energy With an increasing share of renewable energy in the energy system, the demand for software services like market demand and production forecasting, trading software and grid monitoring will be increasingly import- ant, and can provide opportunities for growth. Arendals Fossekompani is actively pursuing these opportunities through our investment strategy, both in our existing portfolio and in our prospective investments. Time horizon: Long term Location in value chain: Own operations Material negative impact: Consumption of energy Our own, as well as our suppliers', production, processing and transportation consume energy. Limiting our energy consumption, especially in sites with a higher proportion of fossil fuels consumed, will be required to reduce this impact over time. Time horizon: Short term, long term Location in value chain: Upstream value chain, Own operations Resilience to climate risks A resilience analysis was conducted in 2024 along with the update to our climate risk assessment. We evaluated gross transition risks and physical risks informed by different climate scenarios and considered the resil- ience of our business model and strategy by assessing the materiality of the mitigated and unmitigated risks. The resilience analysis covered risks emerging from our existing portfolio companies across their value chain, and assessed the resilience of Arendals Fossekompani as an owner. The scenarios used are Net Zero 2050 and Fossil-fuelled development as outlined under IRO-1. The resilience analysis found that Arendals Fossekompani demonstrates resilience in the Net Zero 2050 scenario, with investments supporting the transi- tion to a low-carbon economy. To maintain this resilience, it is crucial for that our portfolio understand and manage the transition relating to the risks associated with a Net Zero 2050 future. Several of our portfolio companies have complex and global value chains that are particularly vulnerable to risks related to the sourcing of raw materials and prod- ucts. Many of these materials and products are sourced from countries at high risk of climate change-driven events such as heat waves, drought and wildﬁres, which could impact both availability and price, but also own operation facilities. Therefore, it is essential for Arendals Fossekompani that our portfolio companies understand their exposure to physical climate risks and are equipped to manage these risks efﬁciently to stay resilient. The analysis is dependent on assumptions and scenar- ios that entail some uncertainty. It must be revisited periodically to ensure the conditions considered remain accurate and the mitigating actions our resilience is founded on continue to meet our needs. E1-2 POLICIES Arendals Fossekompani ASA’s Environmental Policy recognises the actual and potential impact that compa- nies such as ours have on the environment. It considers environmentally sustainable business conduct as both an opportunity to ensure long-term performance and growth for Arendals Fossekompani, and a necessity to reach the objectives set out in the Paris Agreement. The Policy’s direct scope is Arendals Fossekompani ASA, and it is applicable and communicated to all Arendals Fossekompani ASA’s employees. The Policy is also available and communicated to our portfolio companies, suppliers, business partners and other third parties and published on arendalsfossekompani.no. It outlines an expectation that the portfolio companies in the Arendals Fossekompani Group should establish similar policies according to their material environmental matters. Especially in manufacturing-heavy or -dependent parts of the portfolio where the Environmental Policy does not apply or where an equivalent is not in place, it is expected that a new or updated policy be introduced by the end of 2025. The Policy outlines our approach to environmental sus- tainability and responds to our material IROs: • Climate change mitigation: Arendals Fossekompani is committed to playing its part in reaching the envi- ronmental objectives set out in the Paris Agreement. Considering our emission of GHGs, the Policy outlines the GHG emissions intensity and absolute emissions reduction targets detailed below, and our objective to further reduce GHG emissions related to our con- trolled business operations, and in our value chains where possible. We will include EU Taxonomy eligibility assessments in our new business ventures, and will not invest in fossil fuel expansion, climate denial, or lobbying against climate-forward regulations. We believe innovation and technology will be key to fur- ther decreasing GHG emissions, and we will contrib- ute to further development of such innovation and technology through our portfolio companies. • Climate change adaptation: The Policy recognises our vulnerability to the effects of our changing cli- mate, and that we endeavour to make the necessary changes to adapt our facilities and business decisions to withstand them. 82 83 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE • Energy efﬁciency: A responsible use of natural resources and energy is promoted, and Arendals Fossekompani shall strive to use all such resources as efﬁciently as possible. • Renewable energy deployment: We are a producer of renewable energy in Norway through our hydropower operations, and encourage our portfolio companies to set Paris Agreement-aligned targets on energy consumption from fossil fuels. The Policy introduces our commitment to playing our part in reaching the environmental objectives set out in the Paris Agreement, and to comply with all applicable laws and regulations regarding environmental sustain- ability and protection, including the Norwegian Pollution Act, Nature Diversity Act, Nature Conservation Act and applicable laws and regulations related to emissions of GHG. It outlines our approach to continual assessment and improvement through regular DMAs for Arendals Fossekompani ASA, supporting data collection and IRO identiﬁcation in portfolio companies, continuously iden- tifying areas for improvement, conducting assessments on adverse environmental impacts prior to making material business decisions, and regularly assessing compliance with the Policy and performance on our environmental strategy, including by monitoring prog- ress against key performance indicators (KPIs) and any measures taken to minimise our footprint and promote sustainability. Arendals Fossekompani’s Board of Directors adopts and reviews this Policy and delegates of operational imple- mentation and monitoring to Arendals Fossekompani’s CEO who delegates to the Chief Sustainability Ofﬁcer. The Policy was last updated in 2024 to reﬂect the IROs identiﬁed in our DMA, and continual updates to the policy will be conducted as relevant in accordance with the ﬁndings of future DMAs. Our DMA process incorporates the views of employees and relevant stakeholders. The policy is provided to our portfolio companies and we expect them to adopt their own policies according to their material environmental matters in alignment with this framework. Environmental policies in our portfolio ENRX, NSSLGlobal and Tekna have implemented Environmental Policies equivalent to Arendals Fossekompani ASA's. All three cover climate change mitigation and energy efﬁciency. NSSLGlobal's Environmental Policy also covers climate change adap- tation and renewable energy deployment, which is found in Tekna's Environmental Policy as well. Volue developed a new Environmental Policy in 2024, awaiting approval from its Board of Directors in 2025, and addressing climate change mitigation and energy efﬁciency. Alytic and AFK Eiendom do not have dedicated Environmental Policies. E1-4 TARGETS Arendals Fossekompani is committed to playing our part in contributing to a low-carbon economy. As an industrial investment company, our portfolio of investments and their respective value chains represent most of our GHG emissions, which informs our transition planning for climate change mitigation. Arendals Fossekompani ASA and portfolio companies NSSLGlobal and Tekna have set Paris Agreement- aligned emissions reduction targets relating to Scope 1 and 2 GHG emissions as follows. These targets intend on reducing our GHG emissions and mitigating our risk related to climate-related mandates or regulations, and are supported by actions outlined in E1-3. • Arendals Fossekompani ASA has committed to reduce absolute Scope 1 and 2 GHG emissions by 42% by 2030 from a 2021 base year, and to actively source 100% renewable electricity every year by 2030. These targets have been approved by the Science-Based Targets initiative (SBTi). • NSSLGlobal has committed to reduce absolute Scope 1 and 2 emissions by 50% by 2035 from a 2020 base year. • Tekna has committed to reduce absolute Scope 1 and 2 emissions by 50% by 2030 from a 2021 base year. • NSSLGlobal and Tekna have also stated an ambition to achieve carbon neutrality by 2050, also including Scope 3 emissions to the extent mandated by the UK Government, and to the extent data is collected, respectively. PERFORMANCE ON TARGETS Arendals Fossekompani Group’s performance against our targets: Baseline 2023 Performance 2024 Performance Target Unit Company Year Value Value % reduction vs. baseline Value % reduction vs. baseline Scope 1 and 2: 42% absolute emissions reduction by 2030 tCO 2 e Arendals Fossekompani ASA 2021 26 30 +16% 24 -8% 100% electricity consump- tion from renewable energy sources by 2030 % Arendals Fossekompani ASA N/A N/A 73 N/A 75 N/A Scope 1 and 2: 50% absolute emissions reduction by 2030 tCO 2 e Tekna 2021 619 619 0% 610 -1.5% Scope 1 and 2: 50% absolute emissions reduction by 2035 tCO 2 e NSSLGlobal 2020 331 409 +24% 390 +18% Scope 1 and 2: 42% emissions intensity reduction by 2030 1 % (tCO 2 /mNOK) AFK Group 2021 104 77 -27% 65 -37% 1. This target will be evaluated in developing our transition plan in 2025. Renewable energy certiﬁcates (RECs) Arendals Fossekompani has taken a conservative approach to the calculation on energy type, such that only consumption of electricity, heat, cooling or fuel covered by energy attribute certiﬁcates (such as guarantees of origin or RECs) is considered to be from renewable sources. In the absence of such certiﬁcates, energy is considered to be fossil fuel based, regardless of the local electricity mix. As energy consumption is reported across the Group, different conversion to MWh or other calculations required are conducted via our system provider CEMAsys. The emissions factors assume energy types using this conservative approach. Nuclear energy has been classiﬁed as fossil fuel energy in the absence of a certiﬁcate. 4% of the total Scope 2 energy is covered by energy attribute certiﬁcates, both in the form of guarantees of origin and RECs. Notes on targets In the absence of collective absolute GHG emissions reduction targets, the "Performance on Targets" table indicates the relevant company targeted. In monitoring the emissions intensity of Arendals Fossekompani Group, all companies in scope of the consolidation boundaries outlined under BP-1 are considered. When referring to Scope 2 emissions, Scope 2 (location-based) tends to be used. Stakeholder involvement in setting these targets mirrors that outlined under S1: Own workforce on page 120. 2021 was set as a base year as it was the ﬁrst year of complete data collection, except for NSSLGlobal, for which 2020 was chosen; as this was a COVID-19 year, emissions are not representative of typical output and may need to be reviewed in the future. These three com- panies’ Scope 1 and 2 GHG emissions represent 27.4% of the Arendals Fossekompani Group’s total Scope 1 and 2 emissions in 2024. In addition, as an owner, Arendals Fossekompani ASA has committed to 60% of its eligible private equity and listed equity portfolio by book value setting SBTi-validated targets by 2027 from a 2021 base year. This commitment is also validated by SBTi and is expected to substantially increase the proportion of the Group’s GHG emissions covered by ambitious emissions reduction targets by 2027. In 2024, we have also committed to include EU Taxonomy eligibility assessments in all M&A activities and new business ventures by 2025. 84 85 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE • AFK Eiendom’s GHG emissions are largely attribut- able to its construction contractors, who work on projects for delivery to clients. In 2024, contractors were informed that they could use heat pumps during construction to use renewable energy in heating during construction, rather than fossil fuel sources. To improve our collaboration with contractors in 2025, we will begin incorporating GHG data requirements into our forward-looking agreements. • ENRX and AFK Eiendom completed the refurbish- ment of the Skien site in 2024, contributing to AFK Eiendom’s Scope 3 emissions in 2024. Improvements in ENRX's energy efﬁciency will be felt in 2025. • AFK Vannkraft began building a new ﬂood overﬂow channel in 2024 to increase its resilience to climate change, expected to be completed in 2025. • Alytic Group continued to focus on emissions reduc- tion in business travel in 2024, including by prioritising virtual meetings and when necessary to travel, by considering environmentally-friendly tickets where possible. These initiatives are designed to reduce our emission of GHGs and mitigate our policy and legal risk. AFK Eiendom's investments in Skien and AFK Vannkraft's investments in the new ﬂood channel are included under the Under construction balance listed in Financial Note 5, and amount to NOK 29 million and NOK 2.98 million respectively. These actions are included in the climate change mitigation CapEx activities in the EU Taxonomy report. Total energy produced Arendals Fossekompani Group produced 606,629 MWh of energy in 2024. This was renewable energy from hydropower by AFK Vannkraft, for which it sold Guarantees of Origin for hydropower on 86% of energy produced; these were for unbundled energy attribute claims. E1-5 ENERGY CONSUMPTION AND MIX 2023 2024 (1) Fuel consumption from coal and coal products (MWh) - - (2) Fuel consumption from crude oil and petroleum products (MWh) 2,607 2,532 (3) Fuel consumption from natural gas (MWh) 5,808 5,478 (4) Fuel consumption from other fossil fuel sources (MWh) - - (5) Consumption of purchased or acquired electricity, heat, steam and cooling from fossil sources (MWh) 17,237 18,009 (6) Total fossil energy consumption (MWh) 25,652 26,019 Share of fossil sources in total energy consumption (%) 95% 94% (7) Consumption from nuclear sources (MWh) - - Share of consumption from nuclear sources in total energy consumption (%) 0% 0% (8) Fuel consumption from renewable sources, including biomass (also comprising industrial and municipal waste of biologic origin, biogas, renewable hydrogen, etc.) (MWh) 86 119 (9) Consumption of purchased or acquired electricity, heat, steam and cooling from renewable sources (MWh) 1,363 1,134 (10) Consumption of self-generated non-fuel renewable energy (MWh) - 351 (11) Total renewable energy consumption (MWh) 1,449 1,604 Share of renewable sources in total energy consumption (%) 5% 6% Total energy consumption (MWh) 27,100 27,623 ENERGY INTENSITY PER NET REVENUE, IN 2024 Total energy consumption per net revenue, relating to activities in high climate impact sectors (MWh / million NOK) 1 8.0 1. The denominator uses revenue from ENRX, Tekna, AFK Eiendom and AFK Vannkraft as stated in Financial Note 1. These have been assessed to have revenues primarily from Manufacturing (ENRX and Tekna), Real Estate (AFK Eiendom) and Electricity, Gas, Steam and Air Conditioning Supply (AFK Vannkraft). Arendals Fossekompani ASA’s two existing emissions reduction targets have been approved by the Science- Based Targets initiative (SBTi). Tekna and NSSLGlobal set their targets with the intention of meeting the Paris Agreement, and while not validated by the SBTi, sought to be science-based. Finally, Arendals Fossekompani Group’s emissions intensity was measured in 2024 and mapped to Arendals Fossekompani ASA's absolute emissions reduction target. As an investment company with ﬂuctuations in our portfolio over the years, the Group’s emissions inten- sity is a more comparable ﬁgure year-on-year than net emissions for the Group. We currently use tonnes of CO2 emitted (Scope 1, 2 and 3) as the numerator and millions of NOK in revenue as the denominator. We will endeavour to ensure our emissions intensity target is science-based and in line with the Paris Agreement when establishing our transition plan. E1-1 TRANSITION PLANNING In an effort to meet our decarbonisation targets relating to our own operations, and to the extent possible, to our value chain, Arendals Fossekompani is developing a transition plan. The plan will include decarbonisation levers for the Group collectively along with details on the resource allocation required to meet these targets. This is expected to be delivered by 2026 and will follow the upcoming EFRAG Implementation Guidance on transi- tion plans. Arendals Fossekompani’s Board of Directors is ulti- mately responsible for establishing plans and goals to ensure that Arendals Fossekompani's business model and strategy are compatible with the transition to a sustainable economy, limiting global warming to 1.5°C in line with the Paris Agreement and climate neutrality by 2050. Accordingly, Arendals Fossekompani’s manage- ment team and members of the Boards of Directors and ownership teams of our portfolio will coordinate on iden- tifying the decarbonisation levers, actions and resource allocations required. Portfolio company ENRX's Scope 1 emissions account for 51% of Arendals Fossekompani Group’s total Scope 1 emissions in 2024. Its location-based Scope 2 emissions represent 79% of the Group's total in that category, and the company’s Scope 3 emissions represent as much as 93% of the Group's total Scope 3 emissions. Given the magnitude of the emissions from ENRX, the primary focus will be on this company, given that the composition of the portfolio remains the same. For more detail on the opportunities for GHG emissions reduction that have been identiﬁed within the current scope of our transition planning, see E1-3 Actions. Arendals Fossekompani Group’s efforts to increase alignment of economic activities in accordance with the EU Taxonomy’s framework are outlined in detail in the EU Taxonomy Report. E1-3 ACTIONS IN SUPPORT OF TRANSITION PLANNING Since Arendals Fossekompani does not yet have a transition plan at the Group level, decarbonisation levers have not yet been deﬁned, and expected GHG emis- sions reductions and monetary amounts of CapEx and OpEx required to implement the actions have not been calculated. In support of the development of our transition plan, in 2024, Arendals Fossekompani Group developed the ﬁrst baseline of Scope 3 GHG emissions, and updated its climate risk assessment. In 2025, we intend on improv- ing the data on which our assessments and actions will be based. With a focus on the largest GHG emitters in Arendals Fossekompani Group, we will strengthen the accuracy and understanding of our Scope 3 upstream and downstream emissions, as well as quantifying the potential ﬁnancial effects linked to signiﬁcant physical and transition risks and climate-related opportunities. Within the portfolio, the following initiatives are in motion. While Scope 1 and 2 emissions reduction is vis- ible at the Group level, it has not been attributed to any action in particular. • Tekna expects to update, expand and ﬁnalise its decarbonisation plan in 2025. Accordingly, the company expects to set Scope 3 reduction target(s) in 2025, a climate risk mitigation plan in 2026, and mid- to long-term budget planning to execute on the decarbonisation plan by 2027. Within its own oper- ations, the decarbonisation levers identiﬁed include transitioning to more renewable energy, reducing unnecessary travel or improving the carbon foot- print of required business travel, and investing in and switching to electricity instead of fuel sources. • NSSLGlobal maintains a Carbon Reduction Plan that is reviewed annually. In 2024, actions taken addressed known GHG emissions based on previous years’ data, namely Scope 1 and 2 GHG as well as limited Scope 3 GHG categories. Accordingly, NSSLGlobal changed to certiﬁed green energy suppliers (Scope 1 and 2) in the UK for gas and electricity, supplied its two main ofﬁces with electric vehicle charging points, and has provided an incentive to encourage employees to switch to electric vehicles. It has included bespoke environmental and sustainability online training for all its staff along with increased communication on sustainability and is making changes to the heating and air conditioning systems at its Redhill site to be more environmentally friendly. 86 87 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE E1-6 GROSS SCOPES 1, 2, 3 AND TOTAL GHG EMISSIONS Base year: 2021 2023 2024 % 2024 / 2023 2030 Annual % target/ base year Scope 1 GHG emissions No collective targets have been set yet Gross Scope 1 GHG emissions (tCO 2 eq) 1,584 1,858 1,794 97% Percentage of Scope 1 GHG emissions from regulated emission trading schemes (%) 0 Scope 2 GHG emissions Gross location-based Scope 2 GHG emissions (tCO 2 eq) 2,838 2,318 1,950 84% Gross market-based Scope 2 GHG emissions (tCO 2 eq) 4,310 4,341 4,209 97% Signiﬁcant scope 3 GHG emissions Total Gross indirect (Scope 3) GHG emissions (tCO 2 eq) 677,009 n/a 1 1 Purchased goods and services 35,889 n/a Cloud computing and data centre services 427 2 Capital Goods 2,650 n/a 3 Fuel and energy related activities (not included in Scope 1 or 2) 1,303 1,176 90% 4 Upstream transportation and distribution 3,336 n/a 5 Waste generated in operations 287 277 97% 6 Business travel 1,898 2,051 108% 7 Employee commuting 1,948 n/a 8 Upstream leased assets 9 Downstream transportation and distribution 10 Processing of sold products 11 Use of sold products 629,097 n/a 12 End-of-life treatment of sold products 33 n/a 13 Downstream leased assets n/a 14 Franchises 15 Investments 552 n/a Total GHG emissions Total GHG emissions (location-based) (tCO 2 eq) 8,794 1 7,671 1 680,753 n/a 1 Total GHG emissions (market-based) (tCO 2 eq) 10,265 1 9,687 1 683,012 n/a 1 The biogenic emissions from the combustion or biodegradation of biomass not included in GHG emissions reported in 2024 was 27.2 tCO2e for Scope 1, 0 tCO2e for Scope 2 (location-based) and 0 tCO2e for Scope 3. Emissions intensity per net revenue, in 2024 All activities 2 GHG emissions intensity per net revenue (location-based, in tCO 2 eq/mNOK) 119 GHG emissions intensity per net revenue (market-based, in tCO 2 eq/mNOK) 119 1. Only a limited set of Scope 3 categories were reported in previous years (categories 3, 5 and 6) such that the total emissions in 2024 are not comparable to previously reported data. 2. The denominator uses Group consolidated revenue as stated in Financial Note 1 in addition to revenue from discontinued operations as stated in 3.1, 3.2 and 3.3. Greenhouse gas accounting and methodology notes Arendals Fossekompani applies greenhouse gas (GHG) inventory accounting principles as its reporting methodol- ogy, ﬁrst and foremost in accordance with ESRS, which builds upon the GHG Protocol Corporate Accounting and Reporting Standard (GHG Protocol) of 2004 (with Scope 2 guidance updated in 2015). The GHG Protocol was developed by the World Resources Institute and the World Business Council for Sustainable Development. In alignment with the GHG Protocol, Arendals Fossekompani takes into consideration the gases CO2, CH4, N2O, HFCs, PFCs, SF6 and NF3 when converting consumption data to tonnes of CO2 equivalents (tCO2e). The Global Warming Potential used in the calcula- tion of tCO2e is based on the Intergovernmental Panel on Climate Change’s Fourth Assessment Report. As there is currently no externally established methodology guidance on calculating emissions factors, Arendals Fossekompani’s GHG emissions accounting is developed using emissions factors calculated based on methodologies recognised by CEMAsys as credible. These are from well-known, internationally-rec- ognised sources including DEFRA, IEA and Ecoinvent and can be found on the next page. We are open about the sources and calculation methodologies used and strive for consis- tency throughout reporting periods. Where there has been a change in the methodology, this is communicated. Consolidation boundaries This GHG emissions table includes all consolidated subsid- iaries in the Arendals Fossekompani Group. Unconsolidated subsidiaries and joint ventures are not included, as we do not have operational control over any of them. Their emissions are included in Scope 3 Category 15: Investments. Scope 3 GHG materiality assessment Based on a screening conducted in the autumn of 2024 across Arendals Fossekompani and including each port- folio company, the following Scope 3 Categories have been found to not be relevant for Arendals Fossekompani Group: Category 8: Upstream leased assets; Category 9: Downstream transportation and distribution; Category 10: Processing of sold products; Category 13: Downstream leased assets; and Category 14: Franchises. Year-on-year changes Year-on-year comparability of GHG emissions is limited by the availability of historical data for most Scope 3 categories, and by the accuracy of historical data for some. The signiﬁ- cant increase in Scope 3 emissions is attributable primarily to the availability of data in 2024. GHG emissions ﬂuctuation due to changes to the Group and its value chain in 2024: • Arendals Fossekompani reduced its shareholding in Volue from 60% to 40%, with effect in our ﬁnancial reporting from 1 November 2024. As a result, Volue’s GHG emissions were included into the Group’s GHG emissions as follows: emissions for ten months were consolidated into the Group’s totals in Scope 1, 2, and 3 Categories 1-14 in the above table; emissions for two months were counted in the Group’s Scope 3 Category 15: Investments. Due to a lack of monthly data, it was assumed that full year emis- sions were evenly divided into 12 months. • Arendals Fossekompani divested from Vergia in 2024 and is not a part of our carbon accounting. • Arendals Fossekompani discontinued our engagement in Ampwell’s subsidiary Commeo in 2024; from June 2024 onwards, only Cellect remains as part of our carbon accounting. Estimations and sources of uncertainty Estimations or emission factors were used for a majority of data points in our carbon accounting, as outlined below and in the sources on the next page. • Scope 1 data (direct emissions from own operations) was collected as consumption data in units such as litres or cubed metres unless CO2e have been provided by suppliers. • Scope 2 data (indirect emissions from own operations) was collected as consumption data in kWh. Emissions factors by market, source of electricity, and application (e.g., district heating, cooling, or use in electric cars) were applied in accordance with the location-based or mar- ket-based methods. • Scope 3 data (emissions from the value chain) was collected through a combination of methods, along with estimations and assumptions where required. When we have not been able to collect primary information about emissions in our value chain, despite making reasonable efforts, estimations have been applied using reasonable and supportable data. It is estimated that 1% of Scope 3 emissions are calculated from primary data. • In the absence of available data for 2024, it was assumed that 2024 emissions were equivalent to 2023 emissions for the following companies: Ampwell (including Commeo for the months until its discontinuation only); and certain Scope 3 categories for Volue. This approach is deemed reasonable due to their very limited emissions in a Group context. Category-speciﬁc notes • Scope 3 Category 1, Purchased goods and services: spend-based method using procurement lists, invoices and other operating expenses. • Scope 3 Category 2, Capital goods: spend-based method using ﬁnancial statements. • Scope 3 Category 3, Fuel- and energy-related activities: activity data on Scope 1 and 2 emissions. • Scope 3 Categories 4 and 9, Upstream and downstream transportation and distribution: spend-based method using supplier-speciﬁc data. Where transportation data was unavailable, estimations were drawn up based on the expected source and mode of transportation used in regional delivery services. In the case of unknowns on where the cost of transportation was borne, it was assumed that transportation was upstream. In some cases where data is unavailable, extrapolations from other parts of the relevant subsidiary are applied based on spend data and purchased goods. • Scope 3 Category 5, Waste generated in operations: combination of activity data using supplier-speciﬁc data related to waste management suppliers, and estimations based on the number of employees in ofﬁces. • Scope 3 Category 6, Business travel: activity data from internal systems and business travel providers. • Scope 3 Category 7, Employee commuting: estimations based on distance to ofﬁce, mode of transport and fre- quency of remote work from known employee commut- ing activity or as sourced from employee surveys. 88 89 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE • Scope 3 Category 11, Use of sold products: estimations based on assumptions of energy use after point of sale, especially in relation to systems produced by ENRX, and to smaller degrees, powders by Tekna, property by AFK Eiendom, and software by Volue. Factors considered include the energy requirements of products sold, expected use time by customers per week and in a product's lifetime, country to which units are sold and where applicable, an estimation of greenhouse gases released by systems produced. The life expectancy of products, where this is not standardised by regulations, is estimated based on day-to-day handling and the environments in which the systems are used, as well as customers' typical maintenance plans or access to spare parts. • Scope 3 Category 12, End-of-life treatment of sold products: estimations based on assumptions on treatment of materials at end-of-life. Where known, local regulations on material treatment in the countries of end-of-life are considered. • Scope 3 Category 15, Investments: includes emissions by non-consolidated investments as reported by these companies. GHG emission factors 2024 Scope 1 Emissions CARBON EMISSIONS FROM CHEMICAL PROCESSES • Dolomitt smelting, Acetylene combusted, Arcal Force, Liquid Oxygene (LOx), Aviform L50, Aviform S-solid • The Norwegian Environment Agency (2022) • Hong, J. et al. (2015). 'Greenhouse gas emissions during the construction phase of a building: A case study in China’, Journal of Cleaner Production. • AirLiquide Arcal force produktdatablad • Avinor 2016 CARBON EMISSIONS FROM REFRIGERANTS R-407 C, R-422 D • DEFRA (2024) • UK Government GHG Conversion Factors for Company Reporting, GWP source: AR5. Emission factor value (kgCO2e/unit) refers to emissions of the gas itself, not the production emissions. Should be used to report direct emissions from gas leakage CARBON EMISSIONS FROM STATIONARY COMBUSTIONS • Burning oil, Natural gas, LPG, Propane, Propane (NO), Heavy fuel oil, Fuel/Diesel oil, Natural gas (DK), Natural gas (US), Natural gas (NL), Natural gas (UK grid) • DEFRA (2024) • UK Government GHG Conversion Factors for Company Reporting • Miljødirektoratet Nasjonale standardfaktorer, 2015 • Dansk Gasteknisk Center (2024) and DEFRA (2024) • EPA (2024) • Netherlands Enterprise Agency (2024) CARBON EMISSIONS FROM FOSSIL FUELS CONSUMED IN TRANSPORTATION • Bioethanol (E85), Petrol, Petrol (E10), Petrol (BR), Diesel, Diesel (B7), Diesel (NO), Diesel (SE), Adblue (urea solution) • DEFRA (2024) • UK Government GHG Conversion Factors for Company Reporting • Norwegian Environment Agency (2024) • Government Greenhouse Gas Conversion Factors for Company Reporting, Methodology Paper for Conversion factors Scope 2 Emissions CARBON EMISSIONS FROM PURCHASED ELECTRICITY Electricity, electricity for charging vehicles, hydropower, solar electricity • GHG (Location-based): IEA Emission Factors 2024, AIB (2024), Energy Statistics Data Browser • Foreløbig national deklarering af 1 kWh el, 2022 (Energinet, 2023) • Energiforetagen (2024) • Taux d’émission de CO 2 associés aux approvisionnements en électricité d’Hydro-Québec 1990-2021, Hydro Quebec • Avg energy consumption (Norsk elbilforening). CARBON EMISSIONS FROM PURCHASED HEATING District heating, District cooling, Heat Natural gas • Energiforetagen (2024) • Fjernkontrollen (2024) • Finnish Energy (2024) • Norsk Energi (2020) • Kredsloeb (2024) • Fjernvarme Miljoenetvaerk Hovedstaden (2024) • Stadtwerke Karlsruhe (2024) • Energetyka Cieplna - W Liczbach (2022) • Stadtwerke Kiel (2024) • DEFRA (2024) Scope 3 Emissions CARBON EMISSIONS FROM PURCHASED GOODS AND SERVICES & CAPITAL GOODS (CATEGORY 1 AND 2) Spend based, food and meals, metals, electronics and ofﬁce equipment • Agribalyse 3.1 (2022) • RISE 2.2 (2023). The Open access list - an extract from the RISE Food Climate Database v 2.2 (2023) • DEFRA (2024) • UK Government GHG Conversion Factors for Company Reporting • Worldstainless (2024). CO2 Emissions report. Industry emissions and related data. • Ecoinvent 3.11 • Dell OptiPlex 7780 All-in-one Desktop 27 (2020) • Based on Dell Latitude 7310 (2021) • iPad Pro (11-inch), Environmental report (2021) • Apple, Product Environmental Report, iPhone 15, 2023 • EPA (2024), v1.3 • Avg. EF of four models of diesel VW Golf cars (compact). CARBON EMISSIONS FROM FUEL-AND- ENERGY-RELATED ACTIVITIES (CATEGORY 3) Fuels and energy • DEFRA (2024), UK Government GHG Conversion Factors for Company Reporting • CO2-calculator, publised by Fjernkontrollen, 2024. • Norwegian Environmental Agency (2024) • IEA (2024), Emission Factors (weighted average 4 Nordic countries), AIB (2024), European Residual Mixes 2022 (weighted average 4 Nordic countries)IEA Emission Factors 2024, CO 2 per kWh electricity only (Total) plus CH4 and N2O (Total). Data for 2022. National electricity generation, combustion emissions only. GWP source: IPCC AR6. Weighted average based on electricity generation 2022 - Sweden, Norway, Denmark, Finland. • SE: Energiföretagen 2021, "Miljövärdering av fjärrvärme" (website) • NO: SSB (energy mix) and emission factors from Norsk energi (2020). CARBON EMISSIONS FROM UPSTREAM TRANSPORTATION AND DISTRIBUTION (CATEGORY 4) Goods transportation • DEFRA (2024), UK Government GHG Conversion Factors for Company Reporting • Carbon emissions from waste generated in own operations & end-of-life treatment of sold products (category 5 and 12) Waste fractions • Ecoinvent 3.11 • DEFRA (2024), UK Government GHG Conversion Factors for Company Reporting • EPA (2024) CARBON EMISSIONS FROM BUSINESS TRAVEL & EMPLOYEE COMMUTING (CATEGORY 6 AND 7) Travelling • DEFRA (2024), UK Government GHG Conversion Factors for Company Reporting • Calculated average for the four Nordic countries based on Rooms Footprint (MtCO2e) presented on hotelfootprints website. • IEA (2024). Road Trafﬁc Information Council (OFV) . Skatteetaten and Norsk Elbilforening • Semestern och klimatet, Metodrapport version 2.0 • Danmarks Statistik (2024) • Ruter 2023 Miljorapportering and SL Hallbarhetsredovisning 2023 • Aars- og baerekraftsrapport 2023 for Vygruppen • VR Group Annual Report 2023 • EPA (2024), Emission Factors for Greenhouse Gas Inventories CARBON EMISSIONS FROM USE OF SOLD PRODUCTS (CATEGORY 11) • Electricity consumed during use phase of sold products • IEA (2024), Energy Statistics Data Browser • DEFRA (2024), AIB (2024), IEA (2024), Energy Statistics Data Browser CARBON EMISSIONS FROM INVESTMENTS (CATEGORY 15) Emissions from various investments • Statens Vegvesen (2024), VegLCA v.5.14b, published 26.04.2024. • Worldstainless (2024). CO2 Emissions report. Industry emissions and related data. • IEA (2024), Emission Factors (weighted average 4 Nordic countries), AIB (2024), European Residual Mixes 2022 (weighted average 4 Nordic countries), 3) %RE based on IEA (2024) • DEFRA (2024) and Norwegian Environmental Agency (2024) 90 91 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE In the absence of certiﬁcations or substantiated evidence otherwise, this chapter assumes the reliance on virgin resources. Our ambition is to improve the quality of this data in the coming years to strengthen our approach to circularity. Methodology notes Deﬁnitions of terms • The overall total weight of products and technical and biological materials used during the reporting period refers to the sum of the weight of all resources reported in 2024, also referred to as ‘total weight’. • Virgin materials are deﬁned as materials not yet used in the economy, including both ﬁnite materials such as iron ore mined from the ground, and resources that can be renewable such as newly produced cotton. Secondary materials are understood to be equivalent to non-virgin materials, and refer to materials that have been previously used. These include materials in products that have been reused, refurbished or repaired, components that have been remanufactured, and materials that have been recycled. • Biological materials are products and materials that ﬂow through the biological cycle. In the biological cycle, processes - such as composting and anaerobic digestion - together help to regenerate natural capital. Biological materials are natural materials (common elements are carbon, hydrogen, and oxygen). The Ellen MacArthur Foundation's deﬁnition is used. Distribution of material sources as a proportion of total • The proportion of each category of materials listed (biological and secondary) is calculated as the sum of the weight of all materials in that category over the total weight of all materials in 2024. Estimations and sources of uncertainty • Virgin or secondary materials: where information was not available to determine the origin of the material, it was assumed to be virgin, such that the absolute weight of known secondary materials is fairly low in 2024. • Arendals Fossekompani secured data from contractors or suppliers where possible, applying estimations thereafter based on standard dimensions or weights of materials used in construction or manufacturing, as applicable. • For parts of the Group where IT equipment purchased in 2024 is not itemised, an assumption of the average number of IT equipment items required was calculated per employee, where every employee is expected to renew their IT equipment every 2.5 years. Assumptions on the metal and other material contents of each IT equipment item is based on standard contents of a laptop according to Circular Computing. To avoid double counting resources, the availability of infor- mation on the origin of resources informed the approach in each site. The proportion of biological or secondary materials was estimated at the level of the precise resource contents where possible, or at the level of the system or material component, if not. Information was gathered at each site, where resource management systems or exact procurement data are not in place, such that estimations are as accurate as possible. E5 Resource use and circular economy Circularity is a new material topic for Arendals Fossekompani in 2024. Responsible use of natural resources enables us to mitigate our reliance on the planet’s ﬁnite resources and supports long-term busi- ness resilience. As an investment company, Arendals Fossekompani primarily works with circularity through our portfolio companies. The potential and actual impacts of manu- facturing companies on this matter far exceed those of ofﬁce-based companies. There is consequently a wide range of approaches to circularity within the Arendals Fossekompani Group. SBM-3 MATERIAL IMPACT Resource inﬂows Material negative impact: Extraction of raw materials The extraction of naturally occurring raw materials places a burden on the planet’s ﬁnite resources. Some of our portfolio companies are engaged in manufacturing and construction activities, which consume raw materi- als. Our impact is built into the availability of renewable or secondary resources sourced by some of the com- panies in our portfolio especially, and grounded in their business models and strategies as production-oriented businesses. In accordance with our strategy and policies, we are committed to ensuring the company’s resilience for generations to come. This requires that we monitor and reduce this impact, and ensure that any potential risks and opportunities arising from it are managed. As we continue to reﬁne the data quality that will inform our decision-making, effects are not yet felt, though parts of our value chain are expected to be affected by efforts to reduce this impact in the coming years, particu- larly in relation to procurement of materials supplied. Our business model and strategy are not expected to change, and our risk assessment on this topic found that they should be resilient in the face of the adjustments required. This was conducted as part of our DMA, using the same time horizons and methods. Time horizon: Short term Location in value chain: Upstream value chain, Own operations E5-1 POLICIES Arendals Fossekompani ASA’s Environmental Policy outlines our approach to circularity. Guided by the Paris Agreement and the UN’s Sustainable Development Goals, the policy sets resource efﬁciency and sustain- ability as key objectives, acknowledges our reliance on natural resources across our value chain, and anchors the aim to avoid and minimise our adverse impacts. Applied to circularity, the Policy’s approach focuses on improving resource efﬁciency and sustainability throughout our value chain, including by investing in new technologies and innovations, as well as products that are eco-friendly, recyclable, recoverable and best-in- class in terms of environmental sustainability. As part of its commitments, the Policy mandates for Arendals Fossekompani ASA to strive to reduce and optimise our usage of natural resources in our own operations and in our value chain. It does not yet specify requirements on transitioning away from the use of virgin resources, relative increases in secondary resources, sustainable sourcing or the use of renewable resources. Arendals Fossekompani ASA's Environmental Policy’s scope, exclusions, approval level, principles, third party standards referenced, accessibility to stakeholders and implementation and review process are outlined under E1: Climate change. Similarly, our portfolio companies' adoption of Environmental Policies equivalent to Arendals Fossekompani ASA's is outlined under E1: Climate change. ENRX's and Tekna's Environmental Policies address resource efﬁciency, and Tekna's also covers transitioning away from the use of virgin resources, with relative increases in secondary resources. NSSLGlobal's policy calls for sustainable sourcing and use of renew- able resources. As of 2024, Volue, Alytic and AFK Eiendom's policies do not address resource use. E5-2 ACTIONS No actions are currently in place relating to resource inﬂows, as the Group’s focus for 2025 is improving the quality of the data collected in order to set targets. Actions are then expected to enable us to meet these targets, once set. E5-3 TARGETS We have not set speciﬁc targets for 2024 regarding the sourcing of sustainable resources because the identiﬁ- cation of the material negative impact of our resource inﬂows is a recent development. For the ﬁrst time, we have collected new data on the types, volumes, and characteristics of the resources required across our portfolio. This data is forming the foundation of a new area of work aimed at establishing a baseline for a future target on sustainable resource sourcing. We expect to have this baseline in place by the end of 2025, with the intention of setting a meaningful target in 2026. E5-4 RESOURCE INFLOWS Arendals Fossekompani measures resource inﬂows at the level of each portfolio company by identifying and estimating the weight of the materials required to manu- facture or produce goods and services. The materials in scope of our material impact are metals in various forms such as copper, steel, ferrites, titanium, aluminium, and tungsten, as well as the raw materials required for glass, gravel, concrete and fuels. The materi- als considered in the below table also include metals and materials required in the development of ICT hardware and software, including electricity and wiring. Weight of materials used during 2024, in tonnes Overall total weight of all products and technical and biological materials 16,628 Absolute weight of secondary materials 11 Distribution of material sources in 2024, as a proportion of total Biological materials 7% Secondary materials 0.1% 92 93 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE EU Taxonomy The EU Taxonomy aims to enhance sustainable invest- ments and prevent greenwashing by establishing a common understanding of sustainable activities. Introduced in 2020, the EU Taxonomy Regulation (Regulation 2020/852) has expanded through various Delegated Acts, including the Climate Delegated Act and the Environmental Delegated Act. It outlines six environmental objectives: 1. Climate change mitigation 2. Climate change adaptation 3. The sustainable use and protection of water and marine resources 4. The transition to a circular economy 5. Pollution prevention and control 6. The protection and restoration of biodiversity and ecosystems Objectives 3-6 were adopted in June 2023 via Commission Delegated Regulations (EU) 2023/2486 and (EU) 2023/2485, along with amendments to Regulations 1 and 2. In February 2024, Norway's Ministry of Finance required reporting on all six objectives for the 2024 ﬁnancial year. Arendals Fossekompani already included objectives 3-6 in our 2023 reporting per the June 2023 regulations. RESULTS AND INITIATIVES IN 2024 Arendals Fossekompani’s portfolio contributes to multi- ple environmental objectives, covering climate change mitigation, climate change adaptation, and transition to a circular economy. Further, we recognise that one of Arendals Fossekompani’s main contributions going forward may be through enabling others in the transition, through activities that have potential to be enabling. Throughout 2024, Arendals Fossekompani has devel- oped its reporting on the EU Taxonomy in line with the developments and new guidance from the European Commission regarding the EU Taxonomy Regulation. This has also led to strengthened understanding of the EU Taxonomy’s deﬁnitions of the KPIs. The key performance indicators (KPIs) show notable changes from 2023 to 2024. Aligned turnover decreased from 22.3% to 8.3%, while eligible turnover increased signiﬁcantly from 37.6% to 51.5%. In capital expendi- tures, aligned CapEx fell from 16.6% to 0.9%, but eligible CapEx rose dramatically from 46.3% to 80.3%. For operational expenditures, aligned OpEx grew from 6.9% to 11.5%, and eligible OpEx surged from 10.4% to 69.1%. These shifts reﬂect an updated screening process of eli- gible activities and assessment of the technical screen- ing criteria. This process is further elaborated below. Furthermore, Volue and Ampwell are not included in the 2024 report due to divestments. The high percentage of eligible activities reﬂects the great potential in our portfolio companies. Our goal is to further increase both eligible and aligned reporting in the years to come. There is great diversity in our portfolio companies, resulting in eligible activities within a range of sectors and environmental objectives. In summary, the eligible and aligned economic activities of the portfo- lio companies are as following: Turnover 1 Aligned 8.3% Eligible, not aligned 51.5% Non-eligible 40.2% CapEx 2 Aligned 0.9% Eligible, not aligned 80.3% Non-eligible 18.7% OpEx 3 Aligned 11.5% Eligible, not aligned 69.1% Non-eligible 19.4% EU TAXONOMY ELIGIBILITY AND ALIGNMENT Environmental objective Economic activity as deﬁned in the EU Taxonomy Transitional/ enabling Aligned/ eligible, not aligned Relevant companies Climate change mitigation 4.5 Electricity generation from hydropower Aligned AFK Vannkraft 3.6 Manufacture of other low carbon technologies * Aligned/Eligible, not aligned Tekna, ENRX 6.5 Transport by motorbikes, passenger cars and light commercial vehicles Eligible, not aligned AFK Vannkraft 7.1 Construction of new buildings Eligible, not aligned AFK Property, ENRX 7.7 Acquisition and ownership of buildings Eligible, not aligned AFK Property, ENRX, NSSLGlobal 8.2 Data-driven solutions for GHG emissions reductions * Eligible, not aligned Alytic 6.15 Infrastructure enabling low-carbon road transport and public transport * Eligible, not aligned ENRX 7.2 Renovation of existing buildings ** Eligible, not aligned AFK Vannkraft, ENRX 4.1 Electricity generation using solar photovoltaic technology Eligible, not aligned ENRX 6.5 Transport by motorbikes, passenger cars and light commercial vehicles ** Eligible, not aligned ENRX, NSSLGlobal 9.1 Close to market research, development and innovation * Eligible, not aligned Alytic 7.4 Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) * Eligible NSSLGlobal Climate change adaptation 7.2 Renovation of existing buildings Not eligible AFK Vannkraft, ENRX 9.2 Close to market research, development and innovation * Eligible, not aligned Alytic 7.1 Construction of new buildings Not eligible AFK Property, ENRX 4.5 Electricity generation from hydropower 1 Not eligible AFK Vannkraft 7.7 Acquisition and ownership of buildings Not eligible AFK Property, ENRX, NSSLGlobal 3.6 Manufacture of other low carbon technologies Not eligible ENRX, Tekna 6.5 Transport by motorbikes, passenger cars and light commercial vehicles Not eligible ENRX, NSSLGlobal 4.1 Electricity generation using solar photovoltaic technology Not eligible ENRX 7.4 Installation, maintenance and repair of charging stations for electric vehicles in build- ings (and parking spaces attached to buildings) Not eligible NSSLGlobal Transition to a circular economy 3.1 Construction of new buildings Eligible, not aligned AFK Property, ENRX 5.5 Product-as-a-service and other circular use-and result-oriented service models Eligible, not aligned ENRX 5.2 Sale of spare parts Eligible, not aligned ENRX 4.1 Provision of IT/OT data-driven solutions * Eligible, not aligned NSSLGlobal 3.2 Renovation of existing buildings Eligible, not aligned AFK Vannkraft, ENRX 5.1 Repair, refurbishment and remanufacturing Eligible, not aligned ENRX * Activities that have the potential to be enabling, however are not classiﬁed as such since the technical screening criteria are not considered met. ** Activities that have the potential to be transitional, however are not classiﬁed as such since the technical screening criteria are not considered met. 1. Electricity generation from hydropower has been accounted for as a climate change mitigation (CCM) activity. 94 95 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE SCOPE Arendals Fossekompani’s portfolio consists of six companies that are included in the 2024 EU Taxonomy report. Joint ventures and associated companies have been excluded, as they are not consolidated in the group’s ﬁnancial statements. There have been made some changes from last year’s reporting. Commeo and Volue are not included in the 2024 report due to divestments, placing them outside the scope. PROCESS The EU Taxonomy assessment has been conducted by each portfolio company, supported by a core team with representatives from Arendals Fossekompani. The process for assessing economic activities have been performed in accordance with the structure of the EU Taxonomy, starting with assessment of eligible activities before assessing compliance with the technical screen- ing criteria for substantial contribution and do no signif- icant harm (“DNSH”). There were made changes to the process from last year. For 2024, each portfolio company conducted minimum safeguards assessments based on its own policies and procedures. Eligible activities that meet the technical screening criteria for substan- tial contribution, DNSH and minimum safeguards are reported as aligned. Arendals Fossekompani reports the EU Taxonomy on an aggregate of portfolio companies. To ensure consistency in reporting and assessments of eligibility and alignment across the portfolio, the core Arendals Fossekompani team has established reporting routines and guidelines for assessments. In 2024, we re-evaluated the eligible activities from the 2023 reporting period. This re-evaluation considered new acquisitions and activities, as well as the ongo- ing relevance of activities identiﬁed during last year’s reporting. Eligibility was assessed by comparing the portfolio companies' business activities against the economic activities deﬁned in the EU Taxonomy across all six environmental objectives. Relevant NACE codes and activity descriptions for each economic activity were identiﬁed and thoroughly examined. In 2023, NSSLGlobal reported on activity 14.1 Emergency services (CCA) and 5.5 Product-as-a-service and other circular use-and result-oriented service models (CE). Due to changes in their production and services delivered, these economic activities have been assessed to no longer be relevant for the company. Therefore, these activities are not a part of the 2024 reporting. In 2023, Tekna reported activ- ity 3.6 Manufacture of other low carbon technologies for their production of additive powders as an aligned activity. After re-evaluating the documentation used for assessing the activity, it has been changed to eligible, not aligned for 2024’s reporting. See activity assessment for further explanation. Arendals Fossekompani has assessed potential eligibility of activities to all relevant environmental objec- tives, as required by the standard, where it was identiﬁed that several portfolio companies had activities under Climate Change Adaptation and one under Climate Change Mitigation that were assessed as not eligible. For activities potentially eligible under the Climate Change Adaptation objective, physical and non-physical adaptation solutions have not been implemented during the reporting period and the activities are therefore considered not eligible. The alignment process involves evaluating the criteria for substantial contribution, do no signiﬁcant harm (DNSH), and minimum safeguards. During the assess- ment of the technical screening criteria, we encountered challenges related to interpretations and best practices. Some of the criteria reference EU directives that may not be adopted or only partially implemented in national legislation where Arendals Fossekompani and its portfo- lio companies operate. In some cases, this has led to the absence of speciﬁc requirements and thresholds. ASSESSMENTS List of abbreviations Abbreviation Deﬁnition CCM Climate change mitigation CCA Climate change adaptation W&M Sustainable use and protection of water and marine resources CE The transition to a circular economy PP Pollution prevention and control regarding use and presence of chemicals B&E Protection and restoration of biodiversity and ecosystems DNSH Do no signiﬁcant harm Economic activity Type of assessment Interpretation and assessment Conclusion 4.5 Electricity generation from hydro- power (CCM) Eligibility AFK Vannkraft operates the hydropower plants at Bøylefoss and Flatenfoss, generating electricity from hydropower. Aligned Substantial contribution Both plants are run-of-river plants and do not have artiﬁcial reservoirs. As such, both hydropower plants meet the substantial contribution criteria listed in letter a). DNSH CCAA Physical climate risk assessment has been conducted across Arendals Fossekompai`s value chain in accordance with the requirements in Appendix A. The assessment was performed in 2024, and the physical risks listed in appendix A were analyzed at economic activity level. The analysis found that both the portfolio com- pany’s value chain and own assets were exposed to both acute and chronical climate hazards. For Bøylefoss, the major physical risks identiﬁed are drought and ﬂooding, while for Flatenfoss, ﬂooding and precipitation are the primary risks. Adaptation solutions for the identiﬁed physical climate risks have been assessed. For Bøylefoss, investigations are underway to strengthen the dam to withstand larger ﬂoods and updated ﬂood values as per NVE's requirements. The measures will be implemented in 2028-2029. For Flatenfoss, a technical plan has been developed to upgrade Flatenfoss Dam to better withstand climate change and increased ﬂooding. The ﬂood control channel is scheduled for completion in 2025, with the remainder of the dam expected to be ﬁnished in 2026. W&M: To comply with the DNSH criteria to water and marine resources two criteria must be fulﬁlled: Compliance with the Water Framework Directive (2000/60/EC), as well as an environ- mental objective set to “good environmental status” or “good ecological potential” Implementation of all relevant measures to achieve the environmental objective, as laid out and monitored through the relevant license.The Water Framework Directive is implemented through “Vannforskriften” in Norway. Both hydropower plants are subject to the regulations governing the upstream Nelaug Dam, which is licensed and subject to reginal water management. Bøylefoss and Flatenfoss are run-of-river plants in a fully regulated watercourse. According to Agder’s regional water management plan, the water bodies’ objectives are set to achieve “good ecological potential” by 2027. AFK Vannkraft are depen- dent on measures taken downstream of Bøylefoss for anadromous ﬁsh to be able to migrate upstream for Bøylefoss and Flatenfoss. Until such measures are implemented downstream, AFK Vannkraft are only imposed a yearly duty to investigate whether measures are taken downstream. This is done regularly and we assess that AFK Vannkraft has conducted all relevant measures required to comply with the criteria. B&E: Environmental impact assessments are carried out on an annual basis for both plants in relation to concession and permit. Mitigation measures are implemented within the time constraints of the concession/permit. None of the plants are in or near biodiversity-sensitive areas. However, measures have been taken to accommodate eels, should it return to the waterways. Measures are also in place to support salmon spawning downstream at Bøylefoss. As such, the criteria listed in appendix D are considered met. 4.5 Electricity generation from hydro- power (CCM) Eligibility See description of the activity in activity 4.5 contributing to CCM above. Additionally, a climate risk assessment is conducted in line with Appendix A, and an expenditure plan has been set up to implement adaptation solutions to reduce the activity’s most signiﬁcant physical climate risks. Eligible, not aligned Substantial contribution The physical and non-physical solutions that have been identiﬁed during the climate risk assessment have not yet been implemented and therefore the criteria for substantial contribution is considered not met. DNSH The criteria for DNSH have not been assessed as the economic activity does not comply with the substantial contribution criteria. 96 97 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE 6.5 Transport by motorbikes, passenger cars and light commercial vehicles (CCM) Eligibility Two new operational vehicles were purchased for Bøylefoss in 2024. Eligible, not aligned Substantial contribution The two new vehicles for Bøylefoss are not low- or zero-emissions light-duty vehicles and are therefore the criteria for substantial contribution is considered not met. DNSH The criteria for DNSH have not been assessed as the economic activity does not comply with the substantial contribution criteria. 7.2 Renovation of existing buildings (CCA) Eligibility AFK Vannkraft is conducting a façade rehabilitation at the Bøylefoss power plant. A physical climate risk assessment has been conducted across in accordance with the requirements in Appendix A. The assessment was performed in 2024, and the physical risks listed in Appendix A were analysed at the economic activity level. The façade rehabilitation has implemented physical and non-physical adaptation solutions that substantially reduce the most important physical climate risks material to the activity. The material climate risks are identiﬁed based on the list set out in Appendix A. The activity is therefore assessed as eligible. Eligible, not aligned Substantial contribution In 2024, the paint was replaced on the exterior of the buildings to ensure better adhe- sion and crack sealing. Silicate paint is now used: it is unorganic, does not emit volatile gases, and is ideal for indoor climates but only suitable for clean masonry or plaster. It requires special protection during application due to its basic nature. This paint does not comply with the criteria for substantial contribution. DNSH The criteria for DNSH have not been assessed as the economic activity does not comply with the substantial contribution criteria. 7.2 Renovation of existing buildings (CCM) Eligibility AFK Vannkraft is conducting a façade rehabilitation at the Bøylefoss power plant that will, over the next year, encompass 100% of the exterior walls and windows. In 2024, 60% of the building has been rehabilitated, and everything has been reused. Eligible, not aligned Substantial contribution The renovation work complies with the deﬁnition for ‘major renovations’ of buildings from Directive 2010/31/EU, as more than 25% of the surface of the building envelope underwent renovation in 2024. Since the building is considered to be a cultural heri- tage and protected building, there are restrictions on which measures AFK Vannkraft can implement, affecting the potential for increasing the energy performance. Due to these limitations, AFK Vannkraft has not assessed the renovation as compliant with the substantial contribution requirement. DNSH The criteria for DNSH have not been assessed as the economic activity does not comply with the substantial contribution criteria. 3.2 Renovation of existing buildings (CE) Eligibility See eligibility description from activity 7.2 contributing to CCA above. Eligible, not aligned Substantial contribution The life-cycle global warming potential (GWP) has not been calculated, and the activity does therefore not fulﬁll the criteria for substantial contribution. DNSH The criteria for DNSH have not been assessed because the economic activity does not comply with the substantial contribution criteria. The activity therefore reported as eligible, not aligned. Economic activity Type of assessment Interpretation and assessment Conclusion 7.1 Construction of new buildings (CCM) Eligibility AFK Eiendom is developing the Bryggebyen residential project, ﬁnancing and executing it for future sale. They are also developing an annex to a commercial building at Bølevegen 4, ﬁnancing and executing it. Additionally, AFK EIendom is devel- oping a new commercial building for Kitron's headquarters and production facilities. Eligible, not aligned Substantial contribution The calculated Primary Energy Demand (PED) of the buildings are not 10% lower than the deﬁned threshold for nearly zero-energy building (NZEB) requirements, and the substantial contribution criteria is not considered met. Additional requirements related to airtightness and thermal integrity have not been calculated, and the activity does therefore not fulﬁll the criteria for substantial contribution. DNSH Since the economic activity does not fulﬁll the criteria for substantial contribution, a complete assessment of the DNSH criteria has not yet been carried out. Economic activity Type of assessment Interpretation and assessment Conclusion 9.2 Close to market research, development and innovation (CCA) Eligibility Edge by Kontali provides a collection of seafood data, giving users access to world-leading data insights with millions of data points 24/7. The platform covers a large variety of seafood species and industries, closely following value chains end to end and covering global trends with detailed in-depth analyses and research. Kontali delivers reports to decision-makers worldwide, both in the private and public sectors. Eligible, not aligned Substantial contribution The activity does not meet the adaptation criteria or the use of best available science and does therefore not fulﬁll the criteria for substantial contribution. As a result, the activity is reported as eligible, not aligned. DNSH Since the economic activity does not fulﬁll the criteria for substantial contribution, a complete assessment of the DNSH criteria has not yet been carried out. 8.2 Data-driven solutions for GHG emissions reductions (CCM) Eligibility Veyt is the global insights business for all signiﬁcant low carbon markets and renew- able energy. Veyt’s platform offers independent and neutral market intelligence, cov- ering green certiﬁcates for power and gas and carbon markets. The aim is to simplify these complex markets to make informed decisions and positively contribute to the global net-zero transformation, supporting ﬁrms by providing price benchmarking, insights and analytics. As such, the activity is predominantly aimed at the provision of data and analytics enabling GHG emission reductions. Eligible, not aligned Substantial contribution Veyt’s solution substantially contributes to GHG emission reductions by enabling the energy market to efﬁciently source renewable energy as the only source of their energy consumption. The documentation requirement regarding life-cycle GHG emissions calculation has not been fulﬁlled, hence the substantial contribution criteria is considered not met. DNSH Since the activity does not meet the substantial contribution criteria, a complete assessment of the DNSH criteria has not been carried out. It is therefore reported as eligible, not aligned. 7.1 Construction of new buildings (CCA) Eligibility See description of activity 7.1 regarding CCM above. A climate risk assessment has been carried out and an expenditure plan for adaptation solutions is implemented for Bryggebyen and Bølevegen 4, in accordance with Appendix A. As a result, Bryggebyen, Bølevegen 4 and Kitron’s headquarters are considered eligible under climate change adaptation. Eligible, not aligned Substantial contribution The implemented adaptation solutions do not meet the criteria for not adversely affecting the adaptation efforts or the level of resilience to physical climate risks of other people, nature, cultural heritage, assets, and other economic activities. As a result of this, the substantial contribution criteria are considered not met. DNSH The criteria for DNSH have not been assessed as the economic activity does not comply with the substantial contribution criteria. 3.1 Construction of new buildings (CE) Eligibility See eligibility description from activity 7.1 regarding CCM above. Eligible, not aligned Substantial contribution The life-cycle global warming potential (GWP) has not been calculated, and the activity does therefore not fulﬁll the criteria for substantial contribution. DNSH Since the economic activity does not fulﬁll the criteria for substantial contribution, a complete assessment of the DNSH criteria has not yet been carried out. 7.7 Acquisition and ownership of buildings (CCM) Eligibility AFK EIendom owns several properties and exercises ownership of these real estates. This includes the properties at Steinodden, Bedriftsveien 17, Gullknapp, Bølevegen 4, and Bryggebyen Vindholmen. Eligible, not aligned Substantial contribution None of the buildings have an Energy Performance Certiﬁcate (EPC) class A, nor are any of them within the 15% of the national or regional building stock expressed as operational Primary Energy Demand (PED) and the substantial contribution criteria are not considered to be met. DNSH Since the economic activity does not fulﬁll the criteria for substantial contribution, a complete assessment of the DNSH criteria has not yet been carried out. 98 99 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Economic activity Type of assessment Interpretation and assessment Conclusion 3.6 Manufacture of other low carbon technologies (CCM) Eligibility Manufacturing of induction power generators for a wide range of applications includ- ing brazing, welding and bonding. The activity enables customers to lower own emis- sions in production processes and enable manufacturing of low carbon technologies. Eligible, not aligned Substantial contribution The purpose of the applications is to strengthen the material structure, durability, and lifetime of metal components, all with high accuracy and repeatability, and replacing alternative technologies with traditional methods such as manual work with ﬂame and gas. As of today, the criteria are not yet fulﬁlled, as no documentation on the life-cycle GHG emissions savings are available at this point. However, the assumption is that induction is the economically best solution for several applications available on the market. DNSH Since the economic activity does not fulﬁll the criteria for substantial contribution, a complete assessment of the DNSH criteria has not yet been carried out. 6.15 Infrastructure enabling low-carbon road transport and public transport (CCM) Eligibility Manufacturing of wireless charging systems for electric-driven buses, heavy-duty vehicles, and ferries for public transportation. Wireless charging based on inductive power transfer offers a higher utilisation of the available charging time, increased safety, and unprecedented system reliability. ENRX’s charging solutions may result in less maintenance and no cabling requirements. Eligible, not aligned Substantial contribution The wireless charging systems for buses, heavy-duty industrial vehicles and public ferries are used as electric charging points for zero tailpipe emissions. In addition, the wireless charging systems for heavy duty industrial vehicles are not dedicated to the transport of fossil fuels. Therefore, the criteria for substantial contribution are consid- ered met. DNSH As the economic activity does not meet the DNSH criteria for all environmental objectives, a comprehensive evaluation of the DNSH criteria has not been conducted at this time. 5.2 Sale of spare parts (CE) Eligibility Sale of spare parts to support lifetime extensions of ENRX’s systems. In addition to refurbishing and upgrading existing installations, spare parts are sold to exceed the baseline by up to 25 years. Eligible, not aligned Substantial contribution The activity does not fulﬁll the criteria for packaging and does therefore not meet the substantial contribution criteria. DNSH Since the activity does not meet the substantial contribution criteria, a complete assessment of the DNSH criteria has not been carried out. It is therefore not reported as aligned. 7.6 Installation, maintenance and repair of renewable energy technologies (CCM) Eligibility A photovoltaic facility has been installed on the building of the site in Przyszowice. This generates the electricity for the building. Eligible, not aligned Substantial contribution The activity involves installation, maintenance and repair of solar photovoltaic systems and the ancillary technical equipment, and therefore meets the substantial contribution criteria. DNSH A climate risk and vulnerability assessment of the most important physical climate risks has been performed. However, there is no plan in place that speciﬁes how and when adaptation solutions will be implemented to mitigate these risks. Therefore, this activity is assessed as not aligned. 6.5 Transport by motorbikes, passenger cars and light commercial vehicles (CCM) Eligibility Some subsidiaries in ENRX own or lease cars, buses or vans and utilise them to trans- port small goods or passengers. Eligible, not aligned Substantial contribution The activity does not meet the criteria for low- and zero-emission vehicles and does therefore not meet the substantial contribution criteria. DNSH Since the activity does not meet the substantial contribution criteria, a complete assessment of the DNSH criteria has not been carried out. It is therefore not reported as aligned. 5.5 Product-as- a-service and other circu- lar use-and result-oriented service models (CE) Eligibility ENRX offers some products for rent, allowing customers to utilise them for a limited time without the need for a one-time purchase. This activity also comes with operational support if requested by the customer. Eligible, not aligned Substantial contribution The activity meets the criteria regarding terms and conditions for use and lifespan and intensity. However, the activity falls short in meeting the criteria for packaging. Therefore, the substantial contribution criteria are not met. DNSH Since the activity does not meet the substantial contribution criteria, a complete assessment of the DNSH criteria has not been carried out. It is therefore not reported as aligned. 5.1 Repair, refurbishment and remanu- facturing (CE) Eligibility ENRX repairs products and parts of products for customers as well refurbishing machines delivered, both electrically and mechanically to extend lifetime and/or repurpose usage. Eligible, not aligned Substantial contribution The repair or refurbishment of products for our customers is aimed at lifetime exten- sion and/or repurposing. However, the activity does not meet the criteria for a waste management plan. Therefore, the substantial contribution criteria are not met. DNSH Since the activity does not meet the substantial contribution criteria, a complete assessment of the DNSH criteria has not been carried out. It is therefore not reported as aligned. 7.1 Construction of new buildings (CCM) Eligibility AFK Eiendom is constructing an annex to the existing ofﬁce building at Bolevegen 4, which is being leased by ENRX. ENRX has operational expenditures related to the annex. Eligible, not aligned Substantial contribution See assessment provided for activity 7.1 Construction of new buildings in the section for AFK Eiendom. 3.1 Construction of new buildings (CE) Eligibility See activity description of activity 7.1 regarding CCM above. Eligible, not aligned Substantial contribution AFK Eiendom is engaged in the construction. See the assessment provided for activity 7.1 Construction of new buildings in the section for AFK Eiendom. 7.2 Renovation of existing buildings (CCM) Eligibility ENRX is involved in the general renovation of the ofﬁces as well as the construction of new ofﬁces. This includes energy improvements of the whole building. Eligible, not aligned Substantial contribution The renovations performed have resulted in a reduction in energy demand of 28%, which is not compliant with the criteria of substantial contribution. In addition, due to lack of documentation, ENRX cannot conclude that the building renovations comply with the applicable requirements for major renovations. Therefore, the substantial contribution criteria are considered not met. DNSH Since the activity does not meet the substantial contribution criteria, a complete assessment of the DNSH criteria has not been carried out. It is therefore not reported as aligned. 3.2 Renovation of existing buildings (CE) Eligibility See description of the activity under 7.2 CCM. Eligible, not aligned Substantial contribution The global warming potential has not been calculated, and the activity does therefore not meet the substantial contribution criteria. DNSH Since the activity does not meet the substantial contribution criteria, a complete assessment of the DNSH criteria has not been carried out. It is therefore not reported as aligned. 7.7 Acquisition and ownership of buildings (CCM) Eligibility ENRX leases Bølevegen 4, consisting of ofﬁces, production facility and storage space. The property is formally owned by AFK Eiendom but is leased through a bare-house agreement where ENRX is responsible for maintenance and repair and risks related to the building. ENRX is considered eligible as a right-of-use asset is recognised in the balance sheet in accordance with IFRS 16. ENRX also owns the property and building of its site in India, Bengaluru and in Przyszowice, Poland. Eligible, not aligned Substantial contribution AFK Eiendom have performed the alignment assessment for Bølevegen 4 as they are the legal owners of the property. See assessment provided for activity 7.7 Acquisition and ownership of buildings in the section for AFK Eiendom. The buildings in Bengaluru and Przyszowice do not meet the requirements regarding energy performance certiﬁcate or primary energy demand. Therefore, the activity does not meet the substantial contribution criteria. DNSH AFK Eiendom have performed the alignment assessment for Bølevegen 4 as they are the legal owners of the property. See assessment provided for activity 7.7 Acquisition and ownership of buildings in the section for AFK Eiendom. There has not been performed an assessment according to Appendix A for the build- ing in Bengaluru or Przyszowice, and the DNSH criteria are therefore not fulﬁlled. As a result, the activity is reported as not aligned. 100 101 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Economic activity Type of assessment Interpretation and assessment Conclusion 7.7 Acquisition and ownership of buildings (CCM) Eligibility NSSLGlobal leases their headquarters building in Redhill. The lease was renewed during the summer of 2024. NSSLGlobal is considered eligible as a right-of-use asset is recognised in the balance sheet in accordance with IFRS 16. Eligible, not aligned Substantial contribution The building does not have an EPC class A, nor is it within the 15% of the national or regional building stock expressed as operational Primary Energy Demand (PED). Therefore, the substantial contribution criteria are not considered met. DNSH CCA: A Physical climate risk assessment has been conducted in accordance with the requirements in Appendix A. The assessment was performed in 2024, and the physical risks listed in Appendix A were analysed at the economic activity level. Since the eco- nomic activity does not fulﬁll the criteria for substantial contribution, the activity will not be able to be aligned, even if the DNSH criteria are fulﬁlled. 7.4 Installation, maintenance and repair of charging sta- tions for elec- tric vehicles in buildings (and parking spaces attached to buildings) (CCM) Eligibility NSSLGlobal have electric vehicle (EV) charging points ﬁtted at three locations for use by staff and visitors. Eligible, not aligned Substantial contribution For the EV charging points at three locations operated by NSSLGlobal, this entails installation, maintenance or repair of charging stations. DNSH CCA: A climate risk and vulnerability assessment of the most important physical climate risks has been performed. However, there is no plan in place that speciﬁes how and when adaptation solutions will be implemented to mitigate these risks. Therefore, this activity is assessed as not aligned. 6.5 Transport by motorbikes, passenger cars and light commercial vehicles (CCM) Eligibility NSSLGlobal own six small to medium work vans. The vans were purchased in 2023 or earlier, but annual maintenance on the vehicles have been conducted. Eligible, not aligned Substantial contribution For their EVs, only the substantial contribution criteria are fulﬁlled, as the speciﬁc emissions of CO 2 are lower than 50gCO 2 /km. As a result, the EVs are compliant with the substantial contribution criteria and will be further assessed for DNSH. For their non-electric vehicles, the substantial contribution criteria are considered not compliant and there will not be performed assessment of DNSH for these vehicles. DNSH CCA: A physical climate risk assessment has been conducted in accordance with the requirements in Appendix A. The assessment was performed in 2024, and the physical risks listed in Appendix A were analysed at the economic activity level. CE: For their EVs, the vehicles are reusable or recyclable to a minimum of 85% by weight. There are measures in place to manage waste in the end-of-life of the ﬂeet and for the reuse and recycling of batteries and electronics, which are outsourced to certiﬁed car maintenance contractor who comply with UK law. However, the vehicles are not of categories M1 and N1 and are therefore not compliant with the DNSH criteria under Circular Economy. As a result, the economic activity is assessed to be eligible, not aligned. P&C: The EVs comply with the most recent applicable stage of the Euro 6 light-duty emission type-approval set out in Regulation No. 715/2007. 4.1 Provision of IT/OT data-driven solutions CE) Eligibility NSSLGlobal installs, deploys, maintains, repairs and provides support for operational NAVCOM and SATCOM equipment. Eligible, not aligned Substantial contribution The IT/OT data-driven solutions do not include sensors, data collection and communications equipment, data repository or software. Therefore, the substantial contribution criteria are not fulﬁlled. DNSH Since the activity does not meet the substantial contribution criteria, a complete assessment of the DNSH criteria has not been carried out. It is therefore not reported as aligned. Economic activity Type of assessment Interpretation and assessment Conclusion 3.6 Manufacture of other low carbon tech- nologies (CCM) Eligibility Production of additive material powders involves using proprietary plasma processes to create and sell spherical powders for Additive Manufacturing, Metal Injection Molding, and Binder Jetting. The systems only release the powder and plasma gases (argon and a secondary gas like helium, nitrogen, hydrogen, or oxygen), none of which are critical for GHG emissions. These powders aim to enhance resource efﬁciency along the value chain, thereby reducing GHG emissions related to materials, manufac- turing, warehousing, transportation, and product use. Eligible, not aligned Substantial contribution Additive Manufacturing (AM) can signiﬁcantly reduce GHG emissions compared to traditional manufacturing methods by cutting carbon emissions in four key areas: materials, manufacturing, warehousing, and transportation. Materials: AM uses only the necessary material, generating minimal scrap. For example, Airbus reports a ﬂy-to-buy ratio of 10:1, while AM can achieve a ratio closer to 1, especially with recyclable unused powder. Manufacturing: AM allows for the design of lighter, stronger, and more efﬁcient parts compared to their traditional counterparts, leading to reduced fuel consumption and emissions, particularly for small production runs and custom parts. Warehousing: On-demand production with 3D printing reduces the need for storage space and the associated energy for temperature, humidity, and lighting control, low- ering the carbon footprint of logistics, which accounts for 5.5% to 13% of global GHG emissions. Transportation: Localised production with 3D printers reduces the need for long-dis- tance transportation, signiﬁcantly impacting GHG emissions, as the transport sector accounts for over 23% of global CO 2 emissions. Laser powder bed fusion, metal injection molding, electron-beam powder bed fusion and direct energy deposition are considered as equivalent in terms of GHG footprint. These AM technologies are considered as the counterpart of conventional machining. AM also enables the production of parts that conventional machining cannot, reducing the buy-to-ﬂy ratio by over 75% and part weight by another 65% with design optimi- zation. Currently, Tekna does not have a life-cycle GHG emission savings analysis available. Therefore, the additive powders segment is not considered compliant with the sub- stantial contribution requirement. DNSH CCA: A physical climate risk assessment has been conducted in accordance with the requirements in Appendix A. The assessment was performed in 2024, and the physical risks listed in Appendix A were analysed at the economic activity level. W&M: A water impact assessment, conducted per Appendix B, ensures that water is ﬁltered before returning to the sewers. Annual quality checks on wastewater from Tekna Plasma Systems Inc's powder production facilities conﬁrm compliance with Sherbrooke's wastewater standards. CE: Tekna evaluates availability and employs techniques for reusing secondary raw materials, designing for durability, recyclability, disassembly, and adaptability, and managing waste and traceability of substances throughout product lifecycles. Metals, particularly aluminium alloys, have high recyclability, with ingots containing 6% recy- cled materials. Tekna's next step is to conduct quality tests on recycled feedstock to ensure it meets client standards. P&C: An assessment per Appendix C conﬁrms that all substances and chemicals used in Tekna’s operations comply with regulations. Tekna has compiled a list of controlled and banned substances and veriﬁed compliance with the laboratory team and build- ing manager. B&E: An assessment has been conducted in accordance with Appendix D. This assess- ment shows that none of Tekna’s operation sites are in or near biodiversity-sensitive areas. 102 103 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE 3.6 Manufacture of other low carbon tech- nologies (CCM) Eligibility Production of turnkey plasma systems involves creating Inductively Coupled Plasma systems and auxiliary equipment like power feeders, probes, and powder washing sys- tems. These turnkey systems develop new materials and optimise material character- istics (spheroidisation) without releasing harmful constituents. Only the material and plasma gases (argon and a secondary gas like helium, nitrogen, hydrogen, or oxygen) are released, which are not critical for GHG emissions. This method is more efﬁcient than alternative chemical processes that generate byproducts, aiming to improve the efﬁciency of the ﬁnished product. Eligible, not aligned Substantial contribution Induction plasma units sold to customers are designed for nano powder synthesis or powder spheroidisation and come in various power levels based on throughput needs. These systems only release the powder and plasma gases (argon and a secondary gas like helium, nitrogen, hydrogen, or oxygen), none of which are critical for GHG emis- sions. As an electricity-intensive technology, the energy mix used signiﬁcantly impacts the carbon footprint, although the technology itself is clean. No other technologies on the market can perform the same functions as induction plasma for these applica- tions, as conﬁrmed by tender calls where Tekna faces no competing technologies, only similar induction plasma solutions. Currently, Tekna does not have a life-cycle GHG emission savings analysis available. Therefore, the plasma systems segment is not considered compliant with the sub- stantial contribution requirement. DNSH Since the economic activity does not fulﬁll the criteria for substantial contribution, a complete assessment of the DNSH criteria has not been carried out. 3.6 Manufacture of other low carbon technologies (CCM) Eligibility With the production of PlasmaSonic wind tunnels, Tekna designs, manufactures, and sells wind tunnels that simulate hypersonic conditions for scientiﬁc research, such as space tourism and hypersonic ﬂight. These wind tunnels allow for material testing in a controlled environment, signiﬁcantly reducing emissions compared to space testing by avoiding fuel combustion and atmospheric contamination (metal particles creating a greenhouse effect). Eligible, not aligned Substantial contribution Ground testing facilities, combined with computational models, simulate space re-entry conditions to develop heat shields from specialised materials. Various ground testing technologies exist with speciﬁc operational ranges (temperature, velocity, heat ﬂux, test duration, gas composition, etc.), making GHG emissions comparisons difﬁ- cult. Flight testing, involving launching sounding rockets at high altitudes or into space, is the counterpart of Tekna’s PlasmaSonic technology in terms of GHG emissions for developing supersonic vehicles. Flight testing involve launching sounding rockets at very high altitude or even in space. While data on large rockets emissions are available, sounding rockets are niche and very little has been published. Depending on the fuel used, combustion by-products like CO 2 , soot, NOx and water vapour are generated in various concentrations, along with unburnt fuel expelled. The fact that important amounts of combustion by-prod- ucts are released in a short period of time and in a concentrated area up to >15km altitude (in opposition with commercial aircraft ﬂying for thousands of kilometres at <10km altitude) can severely impact wetlands and habitat nearby launching pads. Furthermore, spaceﬂight is the only direct human cause of pollution above about 20km altitude. Scientists recently found the stratosphere is peppered with particles containing metals vaporised from the re-entry of satellites and rocket boosters. Also, water vapour released in the stratosphere can act as a greenhouse gas while black soot particles can linger for years, acting like an umbrella, absorbing solar radiation. PlasmaSonic wind tunnels are believed to provide substantial life-cycle GHG emission savings compared to ﬂight testing. However, the substantial contribution criteria are not considered met due to the lack of third-party veriﬁed documentation demonstrat- ing life-cycle GHG emission savings. DNSH CCA: A physical climate risk assessment has been conducted in accordance with the requirements in Appendix A. The assessment was performed in 2024, and the physical risks listed in Appendix A were analysed at the economic activity level. W&M: A water impact assessment, conducted per Appendix B, ensures that water is ﬁltered before returning to the sewers. Annual quality checks on wastewater from Tekna Plasma Systems Inc's powder production facilities conﬁrm compliance with Sherbrooke's wastewater standards. CE: Tekna adopts techniques for reusing secondary raw materials, designing for dura- bility, recyclability, disassembly, and adaptability, managing waste, and tracing sub- stances throughout product lifecycles. PlasmaSonic wind tunnels, with an expected lifespan of over 25 years, have more than 90% recyclable components. P&C: An assessment per Appendix C conﬁrms that all substances and chemicals used in Tekna’s operations comply with regulations. Tekna has compiled a list of controlled and banned substances and veriﬁed compliance with the laboratory team and build- ing manager. B&E: An assessment has been conducted in accordance with Appendix D. This assess- ment shows that none of Tekna’s operation sites are in or near biodiversity-sensitive areas. 3.6 Manufacture of other low carbon tech- nologies (CCM) Eligibility With the development and production of nano materials for Multi-Layer Ceramic Capacitors (MLCC), Tekna uses proprietary plasma technology to produce and sell nano-sized metal powders for MLCC applications. The systems only release the powder and plasma gases (argon and a secondary gas like helium, nitrogen, hydrogen, or oxygen), none of which are critical for GHG emissions. Tekna's nano-sized materials enable electriﬁcation and downsizing of electrical components, thereby contributing to GHG emission reductions. Eligible, not aligned Substantial contribution The documentation requirement for life-cycle GHG emissions calculation has not been fulﬁlled; therefore, the substantial contribution criteria are considered not met. DNSH Since the economic activity does not fulﬁll the criteria for substantial contribution, a complete assessment of the DNSH criteria has not been carried out. MINIMUM SAFEGUARDS Minimum safeguard requirements are deﬁned in article 18 of the EU Taxonomy regulation, according to which an undertaking shall implement procedures to ensure the alignment with: • The OECD Guidelines for Multinational Enterprises ("OECD Guidelines") • The UN Guiding Principles on Business and Human Rights (UNGPs), including the principles and rights set out in the eight fundamental conventions identiﬁed in the Declaration of the International Labour Organisation on Fundamental Principles and Rights at Work • The International Bill of Human Rights The minimum safeguards establish social and gover- nance criteria to ensure that environmentally beneﬁcial activities do not negatively impact broader objectives. Key factors considered in these safeguards include human rights (including labour rights), tax compliance, anti-bribery and corruption measures, and fair business practices. As previously mentioned, the assessment of minimum safeguards was performed by each portfolio company. Signiﬁcant breaches of business conduct principles must be reported to Arendals Fossekompani. We are unaware of any such breaches and have not faced court convictions or allegations from the OECD National Contact Points or the Business and Human Rights Resource Center. Our assessment indicates that the Group Compliance Handbook and policies meet min- imum social safeguards, establishing adequate human rights due diligence processes as per UNGPs and OECD Guidelines. Therefore, we believe all of the portfolio com- panies within Arendal Fossekompani Group are compli- ant with the requirements for minimum safeguards. The Compliance Handbook mandates company-wide risk assessments on Responsible Business Conduct, addressing social matters, human rights, anti-brib- ery, tax, consumer rights, and competition. Arendals Fossekompani's policies are accessible to employees and stakeholders, with onboarding training and whis- tleblowing channels. Companies under the Transparency Act must also conduct risk assessments and report on adverse impacts. AFK Vannkraft and AFK Eiendom jointly assessed compliance with minimum safeguards, incorporating OECD Guidelines and Due Diligence Guidance into the Group’s Compliance Handbook. Their policies, including the Code of Conduct and Business Partner Code of Conduct, afﬁrm commitment to internationally recognised human rights. 104 105 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Alytic's activities comply with minimum safeguards, adhering to human rights requirements and maintaining a zero-tolerance policy for corruption, with no reported cases in 2024. Alytic commits to fair competition and compliance with competition laws. ENRX also meets minimum safeguards, complying with human rights standards and anti-corruption laws, with no reported corruption cases in 2024. The company ensures adher- ence to competition laws and tax regulations. NSSLGlobal aligns with minimum safeguards, enforcing a zero-tolerance policy towards corruption and ensuring compliance with human rights and competition laws, with no reported incidents in 2024. Tekna's activities adhere to minimum safeguards, respecting human rights and maintaining a zero-toler- ance policy for corruption, with no known cases in 2024. The company is committed to fair competition and has not faced signiﬁcant disputes related to competition law. ACCOUNTING POLICIES AND CONTEXTUAL INFORMATION ABOUT THE KPIS Our accounting methodology for calculating and deter- mining the key performance indicators (KPIs) disclosed under the EU Taxonomy Regulation adheres to the requirements set forth in the EU Commission Delegated Regulation 2178/2021. In compliance with this regulation, Arendals Fossekompani reports on turnover, CapEx, and OpEx for both aligned and eligible, but not aligned, economic activities. Throughout 2024, Arendals Fossekompani developed and reﬁned its methodology for calculating KPIs in accordance with the latest developments and guid- ance from the European Commission regarding the EU Taxonomy Regulation. The approaches and methodol- ogies used for KPI calculations have been adjusted to ensure accurate reporting across all six environmental objectives. We will continue to reﬁne our approach to facilitate assurance for the next year. In addition, Ampwell and Volue are not included in the 2024 report due to divestments. As a result of the changes to scope and methodologies, the reported EU Taxonomy KPIs from 2023 are not comparable to the 2024 results. Intercompany transactions have been eliminated in the KPIs. Further, joint ventures and associated companies are not included in KPIs, as they are not consolidated in the group’s ﬁnancial statements. Double counting To ensure compliance with the EU Taxonomy Regulation, we have implemented preventive measures to avoid any dual allocation of the numerator for turnover, CapEx, and OpEx, thereby preventing double counting. Where applicable, companies within the Group have utilised allocation keys based on available data to calculate KPIs, including turnover, CapEx, and OpEx. In some cases, non-ﬁnancial metrics have been used as the basis for the allocation key. However, when such metrics are unavailable, ﬁnancial metrics (revenue-based) have been employed. Throughout 2024, Arendals Fossekompani has not issued new green bonds nor distributed previously issued green bonds for the purpose of ﬁnancing Taxonomy-aligned economic activities. Therefore, Arendals Fossekompani believes there is no need for an adjusted turnover KPI to avoid double counting. Calculation of turnover The proportion of turnover that is aligned and the turnover that is eligible but not aligned is determined by taking the net turnover from products and ser- vices linked to both aligned activities, and eligible but not aligned activities. This amount is then divided by the Group's total net turnover, as outlined in the EU Commission Delegated Act 2178/2021. The EU Taxonomy deﬁnes turnover as revenue rec- ognised pursuant to IAS 1 paragraph 82(a). For Arendals Fossekompani Group and its portfolio companies, IFRS 15 Revenues from contracts with customers constitutes most of the EU Taxonomy turnover. See note 1 for the related information in the ﬁnancial statement. Turnover from economic activities contributing to climate change adaptation that are not enabling are excluded from the KPI in line with the Disclosure Delegated Act Annex I, section 1.1.1. Additionally, turnover from governmental grants have been excluded, and there has been no revenue from non-current assets held for sale during 2024. For the most part, turnover is determined using project or activity codes directly linked to speciﬁc items in the ﬁnancial accounts. The aligned turnover for 2024 is broken down as follows: Turnover (TNOK) Total (in TNOK) Revenue from contracts with customers 361 053 Other sources of income 19 527 Adjustments and eliminations -15 054 Sum 365 526 All intercompany revenue has been eliminated from the KPI and related information. In total, turnover pursued for Arendals Fossekompani's internal consumption amounts to TNOK 1 213. Calculation of CapEx The share of Arendals Fossekompani's aligned, and eligi- ble, not aligned CapEx is calculated as CapEx associated with aligned, and eligible, not aligned economic activities divided by Arendals Fossekompani's total CapEx, as deﬁned in the EU Commission Delegated Act 2178/2021. CapEx covers additions to tangible and intangible assets during the ﬁnancial year, considered before deprecia- tion, amortisation and any re-measurement, including those resulted from revaluations and impairments. Consequently, CapEx includes costs accounted in the following IFRS-standards: IAS 16 Property, Plant and Equipment, IAS 38 Intangible Assets, IAS 40 Investment Property, IAS 41 Agriculture and IFRS 16 Leases. These standards have served as basis for Arendals Fossekompani's allocation of CapEx to the denominator and numerator. Goodwill acquired from business combi- nations are not included. See note 5 and 6 for the related information in the ﬁnancial statement. The numerator of the CapEx KPI includes capital expenditures directly linked to processes and assets associated with Taxonomy-eligible and aligned eco- nomic activities, as outlined in letter (a). Additionally, it encompasses capital expenditures for purchasing outputs from Taxonomy-aligned activities that facilitate the transition to low-carbon operations or contribute to greenhouse gas reduction, as speciﬁed in letter (c) of the EU Commission Delegated Act 2178, section 1.1.2.2. Some capital expenditures are speciﬁc to single activi- ties and are recorded on project basis, such as research and development and new constructions. When spe- ciﬁc information is not available, capital expenditures are allocated using a ﬁnancial metric, speciﬁcally a revenue-based allocation key. As of 2024, Arendals Fossekompani does not have any material capital expen- ditures related to a CapEx plan. The aligned CapEx for 2024 is broken down as following for activity 4.5 Electricity generation from hydropower (CCM): CapEx Total (in TNOK) Additions to property, plant and equipment 6 617 Sum 6 617 None of the reported CapEx for 2024 comes from business combinations. Calculation of OpEx The share of Arendals Fossekompani’s aligned and eligible, but not aligned, OpEx is calculated as the OpEx associated with aligned and eligible, but not aligned, economic activities divided by Arendals Fossekompani’s total OpEx, as deﬁned in the EU Commission Delegated Act 2178/2021. OpEx is deﬁned as direct non-capitalized costs related to research and development, building renovation mea- sures, short-term leases, maintenance and repair, and other direct expenditures necessary for the day-to-day servicing of property, plant, and equipment. This includes expenditures by the undertaking or third parties to whom activities are outsourced, ensuring the continued and effective functioning of such assets. Other direct expenditures related to the day-to-day servicing of property, plant, and equipment include costs such as machine repairs, non-capitalized research and development expenses, and other direct costs associ- ated with the daily servicing of computer equipment, software, and cloud infrastructure. Salary costs related to research and development, main- tenance, and repair represent a signiﬁcant portion of the expenditures in the OpEx KPI. For salary costs that are only partially aligned with the OpEx deﬁnition, allocation keys have been applied to allocate the correct expendi- tures. In instances where maintenance and repairs are performed by employees, an allocation key derived from job descriptions has been used. To determine adequate allocation keys, data from ﬁnancial cost centers have been utilized where possible. Where sufﬁcient data is not available, best estimates are used. To the extent possi- ble, the allocation keys have been based on non-ﬁnancial metrics; however, in some cases, such metrics have not been identiﬁed, and a revenue-based key has been applied. The numerator of the OpEx KPI consists of costs directly associated with processes and assets of Taxonomy- eligible and aligned economic activities, as deﬁned by letter (a) in the EU Commission Delegated Act 2178, section 1.1.3.2. Currently, Arendals Fossekompani does not have any material operational expenditures related to a CapEx plan. The aligned OpEx for 2024 are broken down as follows: OpEx Total (in TNOK) Repair and maintenance costs 14,601 Maintenance materials 3,713 IT dedicated to maintenance 573 Cost of repairing a machine 3,930 Sum 22,819 106 107 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE 8. FUTURE WORK We will continue to improve our reporting process and development of relevant documentation. Additionally, we will evaluate existing data to determine if it can facilitate and support the expansion of allocation keys based on non-ﬁnancial metrics. We recognize that the EU Taxonomy is continually evolving, and future FAQs and publications from the European Commission may pro- vide new insights that could inﬂuence this year's assess- ment. In order to enhance our investment strategy, it is essential to assess our current investments and identify areas for improvement in light of the regulatory require- ments set forth by the EU Taxonomy. This evaluation will allow us to ensure that our investments not only comply with these regulations but also contribute positively to sustainable development. Moving forward, Arendals Fossekompani's investment strategy will prioritize allocating resources towards activities that are eligible under the EU Taxonomy and have the potential to be aligned with its sustainability objectives. By focusing on these criteria, we aim to foster responsible investment practices that support our commitment to environmen- tal and social governance. Proportion of taxonomy-alignment and eligibility per environmental objective The following tables present the proportions of taxonomy-alignment and taxonomy-eligibility for each KPI across the six environmental objectives: PROPORTION OF TURNOVER / TOTAL TURNOVER Objective Taxonomy-aligned per objective Taxonomy-eligible per objective CCM 8,3% 50,4% CCA 0,0% 0,4% WTR 0,0% 0,0% PPC 0,0% 0,0% CE 0,0% 8,9% BIO 0,0% 0,0% PROPORTION OF TURNOVER / TOTAL TURNOVER Row Nuclear energy related activities 1 The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle. No 2 The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies. No 3 The undertaking carries out, funds, or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades. No Fossil gas related activities 4 The undertaking carries out, funds, or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels. No 5 The undertaking carries out, funds, or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels. No 6 The undertaking carries out, funds, or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels. No PROPORTION OF CAPEX / TOTAL CAPEX Objective Taxonomy-aligned per objective Taxonomy-eligible per objective CCM 0,9% 69,9% CCA 0,0% 2,6% WTR 0,0% 0,0% PPC 0,0% 0,0% CE 0,0% 2,1% BIO 0,0% 0,0% PROPORTION OF OPEX / TOTAL OPEX Objective Taxonomy-aligned per objective Taxonomy-eligible per objective CCM 11,5% 72,0% CE 0,0% 0,7% WTR 0,0% 0,0% PPC 0,0% 0,0% CE 0,0% 0,7% BIO 0,0% 0,0% Information regarding nuclear and fossil gas related activities Arendals Fossekompani does not have nuclear and fossil gas related activities in 2024, as stated in the table below: Information regarding the differences between the 2023 and 2024 EU Taxonomy KPIs: Volue and Ampwell are not included in the 2024 report due to divestments. As a result of changes in scope and methodologies, the EU Taxonomy KPIs reported for 2023 are not comparable to those for 2024. This explains the signiﬁcant deviations in percentages between the two years, as shown in the following EU Taxonomy KPI tables. 108 109 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE 9. TURNOVER KPI Financial year 2024 Year Substantial Contribution Criteria DNSH criteria (Does Not Signiﬁcantly Harm) (17) (18) (19) (20) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) NOK % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Electricity generation from hydropower CCM 4.5 360 999 000 8,3% Y N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 9,4% E Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) 360 999 000 8,3% 8,3% 0,0% 0,0% 0,0% 0,0% 0,0% Y Y Y Y Y Y Y 22,3% Of which enabling 360 999 000 100,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% Y Y Y Y Y Y Y 57,7% E Of which transitional 0 0,0% 0,0% Y Y Y Y Y Y Y 0,0% T A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL Manufacture of other low carbon technologies CCM 3.6 1 486 556 273 34,2% EL EL N/EL N/EL N/EL N/EL 23,3% Electricity generation using solar photovoltaic technology CCM 4.1 20 465 0,0% EL EL N/EL N/EL N/EL N/EL 0,0% Electricity generation from hydropower CCM 4.5 0 0,0% EL EL N/EL N/EL N/EL N/EL 0,0% Transport by motorbikes, passenger cars and light commercial vehicles CCM 6.5 0 0,0% EL EL N/EL N/EL N/EL N/EL 0,0% Infrastructure enabling low-carbon road transport and public transport CCM 6.15 52 003 674 1,2% EL N/EL N/EL N/EL N/EL N/EL 0,0% Construction of new buildings CCM 7.1 268 720 000 6,2% EL EL N/EL N/EL N/EL N/EL 0,0% Renovation of existing buildings CCM 7.2 1 722 762 0,0% EL EL N/EL N/EL EL N/EL 0,0% Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) CCM 7.4 0 0,0% EL EL N/EL N/EL N/EL N/EL 0 % Acquisition and ownership of buildings CCM 7.7 8 867 885 0,2% EL EL N/EL N/EL N/EL N/EL 0,1% Data-driven solutions for GHG emissions reductions CCM 8.2 17 495 614 0,4% EL N/EL N/EL N/EL N/EL N/EL 0,7% Close to market research, development and innovation CCA 9.2 17 879 304 0,4% N/EL EL N/EL N/EL N/EL N/EL 0,2% Sale of spare parts CE 5.2 250 610 451 5,8% N/EL N/EL N/EL N/EL EL N/EL 3,3% Provision of IT/OT data-driven solutions CE 4.1 63 378 260 1,5% N/EL N/EL N/EL N/EL EL N/EL 1,3% Product-as-a-service and other circular use-and result-oriented service models CE 5.5 18 825 144 0,4% N/EL N/EL N/EL N/EL EL N/EL 0,9% Repair, refurbishment and remanufacturing CE 5.1 56 475 431 1,3% N/EL N/EL N/EL N/EL EL N/EL 0,0% Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 2 242 585 261 51,5% 42,1% 0,4% 0,0% 0,0% 8,9% 0,0% 37,6% A. Turnover of Taxonomy-eligible activities (A.1. + A.2.) 2 603 584 261 59,8% 50,4% 0,4% 0,0% 0,0% 8,9% 0,0% 59,9% B. TAXONOMY-NON-ELIGIBLE ACTIVITIES Turnover of Taxonomy-non-eligible activities 1 749 165 496 40,2% TOTAL 4 352 749 758 100% (1) Economic Activities (2) Code (3) Turnover (4) Proportion of Turnover {2024} (5) Climate Change Mitigation (6) Climate Change Adaptation (7) Water (8) Pollution (9) Circular Economy (10) Biodiversity (11) Climate Change Mitigation (12) Climate Change Adaptation (13) Water (14) Pollution (15) Circular Economy (16) Biodiversity (17) Minimum Safeguards (18) Proportion of Taxonomy-aligned (A.1.) or eligible (A.2.) turnover, year 2023 (19) Category (enabling activity) (20) Category (transitional activity) 10. PROPORTION OF TURNOVER PER OBJECTIVE Proportion of turnover / Total turnover Ojective Taxomy-aligned per objective Taxonomy-eligible per objective CCM 8,3% 50,4% CCA 0,0% 0,4% WTR 0,0% 0,0% PPC 0,0% 0,0% CE 0,0% 8,9% BIO 0,0% 0,0% 110 111 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE 11. CAPEX KPI Financial year 2024 Year Substantial Contribution Criteria DNSH criteria (Does Not Signiﬁcantly Harm) (17) (18) (19) (20) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) NOK % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Electricity generation from hydropower CCM 4.5 2 978 628 0,9% Y N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 1% E CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 2 978 628 0,9% 0,9% 0,0% 0,0% 0,0% 0,0% 0,0% Y Y Y Y Y Y Y 16,6% Of which enabling 0 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% Y Y Y Y Y Y Y 92% E Of which transitional 0 0,0% 0,0% Y Y Y Y Y Y Y 0,0% T A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL Manufacture of other low carbon technologies CCM 3.6 78 933 388 23,7% EL EL N/EL N/EL N/EL N/EL 11,0% Electricity generation using solar photovoltaic technology CCM 4.1 0 0,0% EL EL N/EL N/EL N/EL N/EL 0,0% Electricity generation from hydropower CCM 4.5 0 0,0% EL EL N/EL N/EL N/EL N/EL 0,0% Transport by motorbikes, passenger cars and light commercial vehicles CCM 6.5 1 847 715 0,6% EL EL N/EL N/EL N/EL N/EL 0,0% Infrastructure enabling low-carbon road transport and public transport CCM 6.15 418 839 0,1% EL N/EL N/EL N/EL N/EL N/EL 0,0% Construction of new buildings CCM 7.1 59 410 576 17,9% EL EL N/EL N/EL N/EL N/EL 25,7% Renovation of existing buildings CCM 7.2 22 485 421 6,8% EL EL N/EL N/EL EL N/EL 0,0% Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) CCM 7.4 0 0,0% EL EL N/EL N/EL N/EL N/EL 0 % Acquisition and ownership of buildings CCM 7.7 59 791 942 18,0% EL EL N/EL N/EL N/EL N/EL 0,0% Data-driven solutions for GHG emissions reductions CCM 8.2 28 260 159 8,5% EL N/EL N/EL N/EL N/EL N/EL 2,3% Close to market research, development and innovation CCA 9.2 8 698 445 2,6% N/EL EL N/EL N/EL N/EL N/EL 1,0 % Sale of spare parts CE 5.2 5 494 787 1,7% N/EL N/EL N/EL N/EL EL N/EL 0,9% Provision of IT/OT data-driven solutions CE 4.1 0 0,0% N/EL N/EL N/EL N/EL EL N/EL 1,1 % Product-as-a-service and other circular use-and result-oriented service models CE 5.5 412 753 0,1% N/EL N/EL N/EL N/EL EL N/EL 0,0% Repair, refurbishment and remanufacturing CE 5.1 1 238 258 0,4% N/EL N/EL N/EL N/EL EL N/EL 0,0% CapEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 266 992 284 80,3% 69,1% 2,7% 0,0% 0,0% 2,1% 0,0% 46,3% A. CapEx of Taxonomy-eligible activities (A.1. + A.2.) 269 970 912 81,2% 70,0% 2,7% 0,0% 0,0% 2,1% 0,0% 63,0% B. TAXONOMY-NON-ELIGIBLE ACTIVITIES CapEx of Taxonomy-non-eligible activities 62 215 714 18,8% TOTAL 332 186 625 100% (1) Economic Activities (2) Code (3) CapEx (4) Proportion of CapEx {2024} (5) Climate Change Mitigation (6) Climate Change Adaptation (7) Water (8) Pollution (9) Circular Economy (10) Biodiversity (11) Climate Change Mitigation (12) Climate Change Adaptation (13) Water (14) Pollution (15) Circular Economy (16) Biodiversity (17) Minimum Safeguards (18) Proportion of Taxonomy-aligned (A.1.) -eligible (A.2.) CapEx, year 2023 (19) Category (enabling activity) (20) Category (transitional activity) 12. PROPORTION OF CAPEX PER OBJECTIVE Proportion of CapEx / Total CapEx Ojective Taxomy-aligned per objective Taxonomy-eligible per objective CCM 0,9% 69,9% CCA 0,0% 2,6% WTR 0,0% 0,0% PPC 0,0% 0,0% CE 0,0% 2,1% BIO 0,0% 0,0% 112 113 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE 13. OPEX KPI Financial year 2024 Year Substantial Contribution Criteria DNSH criteria (Does Not Signiﬁcantly Harm) (17) (18) (19) (20) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) NOK % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Electricity generation from hydropower CCM 4.5 22 818 708 11,5% Y N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 0% E OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 22 818 708 11,5% 11,5% 0,0% 0,0% 0,0% 0,0% 0,0% Y Y Y Y Y Y Y 6,9% Of which enabling 0 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% Y Y Y Y Y Y Y 76,7% E Of which transitional 0 0,0% 0,0% Y Y Y Y Y Y Y T A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL Manufacture of other low carbon technologies CCM 3.6 93 930 260 47,4% EL EL N/EL N/EL N/EL N/EL 4,4% Electricity generation using solar photovoltaic technology CCM 4.1 0 0,0% EL EL N/EL N/EL N/EL N/EL 0,0% Electricity generation from hydropower CCM 4.5 0 0,0% EL EL N/EL N/EL N/EL N/EL 0,0% Transport by motorbikes, passenger cars and light commercial vehicles CCM 6.5 184 857 0,1% EL EL N/EL N/EL N/EL N/EL 0,0% Infrastructure enabling low-carbon road transport and public transport CCM 6.15 23 313 638 11,8% EL N/EL N/EL N/EL N/EL N/EL 0,1% Construction of new buildings CCM 7.1 0 0,0% EL EL N/EL N/EL N/EL N/EL 0,0% Renovation of existing buildings CCM 7.2 16 373 638 8,3% EL EL N/EL N/EL EL N/EL 0,0% Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) CCM 7.4 5 427 0,0% EL EL N/EL N/EL N/EL N/EL 0,0% Acquisition and ownership of buildings CCM 7.7 1 810 661 0,9% EL EL N/EL N/EL N/EL N/EL 1,2% Data-driven solutions for GHG emissions reductions CCM 8.2 0 0,0% EL N/EL N/EL N/EL N/EL N/EL 0,0% Close to market research, development and innovation CCA 9.2 0 0,0% N/EL EL N/EL N/EL N/EL N/EL 0,0% Sale of spare parts CE 5.2 1 004 686 0,5% N/EL N/EL N/EL N/EL EL N/EL 0,3% Provision of IT/OT data-driven solutions CE 4.1 0 0,0% N/EL N/EL N/EL N/EL EL N/EL 0,1% Product-as-a-service and other circular use-and result-oriented service models CE 5.5 75 475 0,0% N/EL N/EL N/EL N/EL EL N/EL 0,0% Repair, refurbishment and remanufacturing CE 5.1 226 413 0,1% N/EL N/EL N/EL N/EL EL N/EL 0,0% OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 136 924 829 69,1% 60,5% 0,0% 0,0% 0,0% 0,7% 0,0% 10,4% A. OpEx of Taxonomy-eligible activities (A.1. + A.2.) 159 743 537 80,6% 72,0% 0,0% 0,0% 0,0% 0,7% 0,0% 17,3% B. TAXONOMY-NON-ELIGIBLE ACTIVITIES OpEx of Taxonomy-non-eligible activities 38 381 483 19,4% TOTAL 198 125 020 100% (1) Economic Activities (2) Code (3) OpEx (4) Proportion of OpEx {2024} (5) Climate Change Mitigation (6) Climate Change Adaptation (7) Water (8) Pollution (9) Circular Economy (10) Biodiversity (11) Climate Change Mitigation (12) Climate Change Adaptation (13) Water (14) Pollution (15) Circular Economy (16) Biodiversity (17) Minimum Safeguards (18) Proportion of Taxonomy-aligned (A.1.) -eligible (A.2.) OpEx, year 2023 (19) Category (enabling activity) (20) Category (transitional activity) 14. PROPORTION OF OPEX PER OBJECTIVE Proportion of OpEx / Total OpEx Ojective Taxomy-aligned per objective Taxonomy-eligible per objective CCM 11,5% 72,0% CCA 0,0% 0,0% WTR 0,0% 0,0% PPC 0,0% 0,0% CE 0,0% 0,7% BIO 0,0% 0,0% 114 115 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 S1 Own workforce 118 Social 116 117 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE S1 Own workforce SBM-3 MATERIAL RISK AND OPPORTUNITY Arendals Fossekompani strives to be a great place to work. As an industrial investment ﬁrm with a global workforce, we rely on our people as our most valuable resource. We are an active owner, and we focus on developing strong and competent Boards of Directors, CEOs and leadership teams across the portfolio, with robust succession plans for continuity and long-term growth. Attracting and building teams and talent across the Group is central to our success, and we believe that a diverse workforce with a wide array of skills and back- grounds drives productivity, new perspectives and value creation and helps us reach our long-term goals. Our per- formance is fundamentally tied to the wellbeing of our employees, and we are committed to nurturing diversity and equity across the entire Group. We are conﬁdent in our strategy and business model’s ability to address our material risk and taking advantage of our material opportunity, and our risk assessment on this topic found that they should be resilient in the face of any adjust- ments required. This was conducted as part of our DMA, using the time horizons and methods outlined in IRO-1. Working conditions Material risk: Dependency on workforce wellbeing We face a risk associated with our dependency on our workforce’s wellbeing. If our employees are unhappy, unsafe or unwell, we may lose them or their ability to create value for the Group. This will incur higher costs resulting from delays, increased recruitment and training requirements, and inefﬁciencies related to absenteeism. Maintaining a healthy, satisﬁed and engaged workforce is essential for us to minimise unwanted turnover, avoid costly and time-consuming effects on our operations and service delivery to customers, and ultimately sustain our performance. Time horizon: Short term Location in value chain: Own operations Equal treatment and opportunities Material opportunity: Gains from a diverse workforce We have an opportunity to gain from further enhancing our diversity and inclusivity. At all levels of the Group, we can beneﬁt from more varied perspectives. When employees have equal opportunities and representa- tion, there tends to be greater worker performance, productivity, innovativeness and retention. While there are initial costs to be incurred on diversity and inclusion investments, a diverse workforce can ultimately improve our decision-making, enhance our organisational per- formance and enable us to access a wider talent pool, presenting opportunities to strengthen our competitive advantage in our markets. This risk and this opportunity are both direct conse- quences of our dependency on our workforce to achieve results. While all employees are essential to our work, certain groups of people are particularly relevant to our material risk and opportunity: • The health and safety of workers involved in day-to-day manual labour or night labour; • Groups at a historical disadvantage or presenting higher risk of discrimination or harassment, such as due to their gender expression, sexual orientation, disability, ethnicity, or religion, among other factors; and • Workers in countries with weaker national protection or welfare systems. Time horizon: Medium term Location in value chain: Own operations S1-1 POLICIES RELATED TO OWN WORKFORCE Arendals Fossekompani is committed to maintaining a healthy and engaged workforce. This commitment is anchored in our Code of Conduct, Business Partner Code of Conduct, Diversity and Inclusion Policy and Whistleblower Policy. Collectively, these policies seek to ensure Arendals Fossekompani’s own workforce is well, safe, and leverages its potential for diversity, thereby managing our material risk and opportunity. The policies are reviewed annually in light of new regu- lations and ﬁndings from the double materiality assess- ment, which integrates key stakeholders’ views into the assessment process. They are approved by the Board of Directors and published on arendalsfossekompani.no. All employees of Arendals Fossekompani ASA access these policies in the employee handbook. Code of Conduct (CoC) The CoC applies to all employees of Arendals Fossekompani ASA, including hired-in personnel, consul- tants, agents, elected representatives, board members and any other person acting on behalf of or representing Arendals Fossekompani. The policy is provided to our portfolio companies, and we expect our portfolio compa- nies to implement corresponding ethical guidelines. We also expect our customers, suppliers, and other business partners to adhere to ethical guidelines of standards consistent with the CoC. All portfolio companies have Codes of Conduct that address core ethical standards such as the respect of human rights. The CoC must be signed by all Arendals Fossekompani ASA employees, and who are also required to be trained in the CoC’s principles. The CoC’s implementation is monitored across Arendals Fossekompani Group by tracking the rates of signature and training com- pletion on the CoC. Arendals Fossekompani’s Chief Sustainability Ofﬁcer reports on progress to the Audit Committee of our Board of Directors at least annually. A central part of the policy is to comply with internation- ally-accepted guidelines and conventions adopted by the United Nations and the OECD, such as the International Bill of Human Rights, the UN Convention on the Rights of Persons with Disabilities, the UN Declaration on the Rights of Indigenous Peoples, the International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work, the European Convention for the Protection of Human Rights and Fundamental Freedoms, the European Social Charter, the Charter of Fundamental Rights of the European Union, and any other fundamental conventions of these organisations. Our CoC supports the fundamental rights and freedoms enshrined in these agreements and applies them to Arendals Fossekompani both directly and through the adoption of other policies as referenced below. The CoC is also aligned with the Norwegian Transparency Act with a commitment to consistently mapping and addressing the actual or potential impact on human or working rights that we may contribute to or cause, and implementing measures to cease, prevent or limit negative impacts. Speciﬁc to our material risk and opportunity, the CoC outlines the guardrails in place for Arendals Fossekompani ASA to ensure a safe and secure working environment, characterised by transparency, honesty and trust, which are important for motivation and well- being. As implementation for this, it references Arendals Fossekompani ASA’s health, safety and environment (HSE) system, risk assessments, and the process out- lined in the Whistleblower Policy. It states that we accept no limitations to the right of our employees and the employees of our subsidiaries, suppliers and business partners, to organise themselves without retaliation of threat of retaliation. The policy also reiterates principles found in the Diversity and Inclusion Policy. An update to the policy in 2024 streamlined our risk management, such that health and safety are refer- enced in the annual risk review process. This change largely reﬂects and better documents the existing prac- tice at Arendals Fossekompani. Business Partner Code of Conduct (BPCoC) Arendals Fossekompani ASA’s BPCoC applies to suppli- ers and business partners. In addition to being publicly available, it is shared directly with business partners where relevant. All portfolio companies have their own BPCoC, which share the same objectives but use varying naming conventions, such as Supplier Code of Conduct, Business Partner Code of Conduct, or simply Code of Conduct. The UN Global Compact’s Ten Principles form the basis of our BPCoC, which contributes to setting the framework for the behaviour Arendals Fossekompani ASA expects of all our stakeholders in our global supply chain. It requires that our business partners respect human rights, and always act in line with the rules and principles laid out in the UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight fundamental conventions identiﬁed in the Declaration of the International Labour Organisation on Fundamental Principles and Rights at Work and the International Bill of Human Rights, and the OECD Guidelines for Multinational Enterprises. Per the BPCoC, our business partners are also expected to comply with internationally-accepted guidelines and conventions such as the UN Convention on the Rights of Persons with Disabilities, the UN Declaration on the Rights of Indigenous Peoples, the European Convention for the Protection of Human Rights and Fundamental Freedoms, the European Social Charter, the Charter of Fundamental Rights of the European Union, and any other fundamental conventions of these organisations. It states also that Arendals Fossekompani and its business partners fully support and will act in accordance with the UN Convention on the Rights of the Child. In 2024, we expanded the possible due diligence and audit on our business partners mentioned in the BPCoC, which now includes all sustainability-related topics deemed material for Arendals Fossekompani. These changes largely reﬂect and better document the existing practice at Arendals Fossekompani. Diversity and Inclusion Policy A new Diversity and Inclusion Policy was introduced in 2024. It applies to Arendals Fossekompani ASA’s employ- ees and projects, and to the areas within our value chain over which Arendals Fossekompani can have inﬂuence. The policy is provided to our portfolio companies and we expect them to adopt their own policies on diversity and inclusion, in alignment with this framework. The policy is also communicated to our suppliers, business partners and other third parties. In addition to national laws and international standards mentioned in the CoC and BPCoC, the Diversity and Inclusion Policy also states that we operate in line with the Norwegian Equality and Anti-Discrimination Act, and the UN Sustainable Development Goals including Goal 5 (Gender equality) and Goal 8 (Decent work and economic growth). The Diversity and Inclusion Policy outlines Arendals Fossekompani’s zero tolerance approach to discrim- 118 119 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE ination, bullying or harassment in the workplace and in recruitment processes, including discrimination on the basis of age, gender expression, sexual orientation, disability, ethnicity, nationality, political opinion, reli- gion or any other basis. We aim for diversity of gender expression, age, background and expertise, and consider this particularly in recruitment, and in the designation of members of management and other bodies. To promote inclusion of diverse perspectives, we are committed to a safe workplace with equal opportunities for all, to providing equal opportunities in promotion and compensation, and to striving for a healthy work-life bal- ance. The Policy is applicable broadly and does not spe- ciﬁcally target vulnerable groups. It is to be implemented by all employees, and in recruitment and learning and development programmes, and its implementation monitored through employees’ responsibility to report cases of harassment or other inadequate working envi- ronment, with reference to the Whistleblower Policy. NSSLGlobal and Volue have implemented their own policies on diversity and inclusion with the same objec- tives. Alytic, ENRX, Tekna and AFK Eiendom do not have a separate diversity and inclusion policy but address the topic within their respective Codes of Conduct. Whistleblower Policy The Whistleblower Policy applies to Arendals Fossekompani ASA’s employees, as well as its suppliers, third-party representatives and other business partners in the context of the Whistleblower Policy. It outlines the expectation for employees and relevant third parties to report any concerns about violations of applicable laws and regulations, internal policies, guidelines and procedures as well as any other unethical conduct that employees are aware of or suspect. This includes danger to health, discrimination or harassment of any kind, and unethical working conditions, business culture or work environment. The Policy also outlines the process by which such reports must be managed. Speciﬁcally, any concerns raised must be handled by per- sons that are not in any conﬂict of interests or otherwise involved, to ensure sufﬁcient independence of assess- ment. Whistleblowers are protected against retaliation. Volue, ENRX and Alytic have Whistleblowing Policies with the same objectives, whereas NSSLGlobal and Tekna address these objectives under their internal and Business Partner Codes of Conduct. AFK Eiendom does not have a Whistleblowing Policy, but visitors to the Arendals Fossekompani website can access the external whistleblowing portal and policy on the same terms as for Arendals Fossekompani ASA. S1-3 CHANNELS FOR OWN WORKFORCE TO RAISE CONCERNS All Arendals Fossekompani’s own employees and rel- evant third parties are encouraged to report concerns about circumstances that might be in violation of appli- cable laws and regulations, internal policies, guidelines and procedures as well as any other unethical conduct that employees are aware of or suspect. The ﬁrst line of reporting is always the employee’s direct manager, or Arendals Fossekompani’s Chief Sustainability Ofﬁcer or safety representative. The CEO, the Chair or any member of our Board of Directors, or our internal or external whis- tleblowing channel at mittvarsel.no are also available. Employees within the Arendals Fossekompani Group are welcome to report any concerns via the external whis- tleblowing channel at mittvarsel.no, or on our webpage arendalsfossekompani.no. Depending on local require- ments, several companies in the portfolio have also established whistleblowing channels of their own for the safe reporting of concerns from their workforce. The Whistleblower Policy and platforms described in S1-1 and G1-1 are essential to ensuring employee trust in these channels, and to tracking, monitoring and acting upon any concerns raised. The Board of Directors of each company in the Group is alerted on critical whistleblower cases raised in their respective company, often reviewed and investigated by a compliance function and reported periodically by Management. Employee awareness of the whistleblowing process is closely monitored through our KPI on employee training rates in the Code of Conduct, which includes units on whistleblowing. S1-4 ACTIONS AND RESOURCES Arendals Fossekompani addresses the material risk and opportunity concerning our own workforce, and seeks to create positive and prevent or minimise negative impacts in our own operations, through various initia- tives. The primary focus in 2024 has been to establish a new launchpad for actions on our own workforce through the revision of our materiality assessment in accordance with CSRD, the update of our policies and introduction of a new Diversity and Inclusion Policy, and the collection of new data. This year also saw continued health and safety trainings in several of our companies, and the onboard- ing of new employee representatives who were trained to foster effective communication, ensure fair treatment, and create a collaborative work environment, which enable the prevention of negative impacts or risks to us. At Arendals Fossekompani ASA, a new Working Environment Committee was established in 2024, to focus on actively improving workplace conditions, including health and safety, and promoting well-being. In other parts of the Group, diversity-oriented initiatives have been organised, such as a monthly company-wide “Women at Volue” talk, trainings in diverse recruitment and inclusive language in job advertisements, which have collectively seen an increase in the proportion of female employees at Volue. NSSLGlobal has signed up to the UK Government’s Disability Conﬁdent employer scheme and Employer Recognition Scheme Silver Award, in support of the Armed Forces Covenant. These measures intend to support with recruitment in speciﬁc areas. Tekna undertook root cause analyses, and train- ings and risk assessments in support of a safety culture. To enhance job security in accordance with legal require- ments, we introduced an extended employer responsi- bility in the Arendals Fossekompani Group. Employees facing redundancy due to expansions, downsizing, or restructuring could be offered a vacancy in another Group company if we or our subsidiaries have controlling inﬂuence. Arendals Fossekompani ASA’s new Diversity and Inclusion Policy will be circulated through the Group in 2025 for each portfolio company to implement or adapt to its own policy and practices. The policy cements best practices and commitments towards diversity and inclu- sion, especially in relation to recruitment and retention. This builds on actions taken in the past several years in accordance with Likestilt arbeidsliv within Arendals Fossekompani, a certiﬁcation scheme that facilitated the development of targets and action plans for the wellbe- ing of our workforce. To operationalise the new policy and meet its objectives, a new blueprint for responding to priority areas and our performance on our KPIs will be shared across the port- folio in early 2025, including overall guidelines on prin- ciples and practices to implement into job descriptions and recruitment processes, as well as investigations into retention data to identify any imbalances in voluntary or involuntary turnover between genders or along other underrepresented factors. Finally, Arendals Fossekompani will conduct a survey of HR managers across the Group to identify any syner- gies or shared practices could be leveraged in relation to managing our material risk or opportunity. This is expected in 2025, with ensuing actions in 2026, if any. Some of these actions are already in place and ongo- ing, while others are starting from 2025, to enhance workforce well-being and our diversity and inclusivity. Dedicated ﬁnancial resources beyond ongoing HR bud- gets have not currently been allocated to these actions. S1-5 TARGETS AND PROGRESS Arendals Fossekompani has deﬁned absolute tar- gets related to our workforce’s wellbeing and diver- sity. Our objectives are directly aligned with Arendals Fossekompani's Diversity and Inclusion Policy and our prioritisation of health and safety, as outlined in our Code of Conduct and internal procedures. The targets listed below have been set and apply to all Arendals Fossekompani Group’s employees. Progress on gender balance metrics has been slower than expected in some areas, despite increases in female representation in some parts of the Group. Targeted efforts are needed to increase gender diversity further. The lost time injury frequency rate improved from 2.2 in 2023 to 1.7 in 2024 , indicating positive strides in enhancing workplace safety. However, there is room for improvement to meet our goal of zero lost time injuries. Sick leave has dropped to 2% in 2024 , well below our target of 3%, signaling that our wellbeing initiatives are effective though require continued focus. Voluntary turn- over is not comparable to previous years, as involuntary departures were previously included in our turnover rate metrics. To ensure progress toward our targets, we monitor met- rics and projects undertaken in the portfolio throughout the year, including through Arendals Fossekompani ASA’s representation on portfolio companies' Boards of Directors. Status and developments against our targets are assessed by Arendals Fossekompani’s Sustainability team, and reported annually to our executive leadership and Board of Directors. Target Year Status 2024 Status 2023 Status 2022 Gender equality Max. 70% of any gender in our workforce 2027 81% men 19% women 79% men 21% women 80% men 20% women Min. 40% women in our Executive Management 2030 76% men 24% women 76% men 24% women 86% men 14% women Employee safety and wellbeing Lost time injury frequency rate of 0 In effect 1.7 2.2 1.0 Aggregate sick leave of <3.0% In effect 2.0% 2.7% 3.0% Voluntary turnover rate of <10% annually In effect 10% 120 121 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Setting targets and involving affected stakeholders Targets are established in relation to risks or oppor- tunities to ensure that they are adequately managed. Target setting for the Group takes place within Arendals Fossekompani’s Group Management, led by the Chief Sustainability Ofﬁcer with oversight from the CEO and management team, and approved by the Board of Directors. Feedback from engagement with employees informs our goals, ensuring alignment with employee needs and strategic objectives. Employee representa- tives also play an active role in monitoring progress, and identifying lessons and improvements based on per- formance. Standards set in the sector, including by our peers, are consulted for reference. Notes on targets related to our own workforce In light of the regulatory requirement on gender balance in Boards of Directors, in place in Norway since December 2024 with a phase-in period to 2028, Arendals Fossekompani has removed its self-imposed target on gender balance in our own Boards of Directors. We consider that this is an ambitious, pro- gressive regulation that sufﬁciently overlaps with our previous target to have a maximum of 60% of any gender on Boards of Directors by 2027, that it warrants the removal of our dedi- cated target. We are committed to remaining compliant with the new regulation. Note: the previous interim target set for the gender balance in our Boards of Directors was a minimum of 40% women by 2023. The target on gender balance in Executive Management considers the C-suite positions or equivalent across the Group. The end date has changed from 2027 to 2030 to better align with our sustainability strategic period. The target on aggregate sick leave in the Group previously varied between <2% and <3%. The target on turnover rate previously included voluntary and involuntary turnover. All targets related to our own workforce apply to Arendals Fossekompani Group as a whole. These ﬁgures therefore represent averages across the Group, rather than exclusively the management team of Arendals Fossekompani ASA, for example. Volue has been consolidated into the Group’s ﬁgures as follows: • For targets on gender balance, data as on 31 December 2024 was used such that Volue’s ﬁgures are excluded; • For targets on employee safety and wellbeing, cumula- tive data over the course of 2024 was used such that 10 months of Volue’s ﬁgures were included as aligned with ﬁnancial statements (the calculation of 10 months was done as 10/12 of the reported total, based on the assump- tion that every month of the year was similar). Where no date is listed, the target is expected to be achieved on an ongoing, annual basis. New data has also been collected in 2024 for the ﬁrst time to establish baselines, and if deemed relevant, targets on gender pay gaps and adequate wages related to country benchmarks. Data was also collected on the number of non-binary employees, for jurisdictions that recognise a gender other than male or female. The data amounted to 0 in 2024. We seek to be an inclusive employer for people with all gender expressions and will continue presenting this as a possible category for reporting. Notes and deﬁnitions Unless otherwise indicated, employees are counted in headcount on 31 December 2024. All ﬁgures relating to Arendals Fossekompani Group’s employees have seen a substantial ﬂuctuation between 2023 and 2024 following the reduction of Arendals Fossekompani's shareholding in Volue from 60% to 40%. As at the end of 2024, Volue is no longer a part of Arendals Fossekompani’s consolidated statements, such that all end-of-year ESG data (as opposed to cumulative data) now excludes Volue’s ﬁgures. Arendals Fossekomani Group’s con- solidated number of employees is used in Financial Note 4. The employee turnover (S1-6) divides the number of employees who left the company in 2024 (whether volun- tarily, involuntarily, other causes, or total) by the average employee headcount in 2024. Other causes of departure was added as a category to include causes such as retire- ment or death. The average number of employees is calcu- lated as the average between the employee headcount on 1 January 2024 and on 31 December 2024. Given Volue was in our consolidated statements until October, ten months of Volue's turnover data are included, and their employee headcount on 1 January 2024 are included but not on 31 December 2024. Employees by contract type, broken down by gender (headcount on 31 December 2024) Female Male Other Not disclosed Total Number of employees 342 1,430 0 0 1,772 Number of permanent employees 336 1,345 0 0 1,681 Number of temporary employees 6 85 0 0 91 Number of non-guaranteed hours employees 0 0 0 0 0 Number of full-time employees 324 1,394 0 0 1,718 Number of part-time employees 18 36 0 0 54 Employees by contract type, broken down by region (headcount on 31 December 2024) Asia Europe North America South America Total Number of employees 499 985 276 12 1,772 Number of permanent employees 447 951 271 12 1,681 Number of temporary employees 52 34 5 0 91 Number of non-guaranteed hours employees 0 0 0 0 0 Number of full-time employees 499 934 273 12 1,718 Number of part-time employees 0 51 3 0 54 Overview of employees who left the company in 2024 (headcount and as a proportion of total employees as on 31 December 2024) Total Voluntary departure (e.g. resignation) Involuntary departure (e.g. dismissal) Other causes of departure (e.g. retirement or death) Number of departures 387 221 145 22 Turnover rate 18% 10% 7% 1% S1-7 CHARACTERISTICS OF NON-EMPLOYEES Headcount of non-employees in the workforce, as on 31 December 2024 Number of individuals Self-employed people 11 People provided by companies primarily engaged in employment activities 57 Total 68 S1-8 COLLECTIVE BARGAINING COVERAGE AND SOCIAL DIALOGUE Coverage of collective bargaining agreements (CBA) and workers’ representatives, as on 31 December 2024 % of all employees covered by a CBA 20% % of all employees in the EEA covered by workers’ representatives 28% Coverage rate Employees with a CBA EEA Employees with a CBA Non-EEA Workplace representation EEA 0-19 % Asia, Europe (non-EEA), North America 20-39 % Norway 40-59 % 60-79 % 80-100 % South America Norway S1-6 CHARACTERISTICS OF EMPLOYEES Employees by gender (headcount on 31 December 2024) Gender Number of employees Male 1,430 Female 342 Other 0 Not reported 0 Total employees 1,772 Employees by country (headcount on 31 December 2024) Country Number of employees Brazil 12 Canada 161 China 202 Denmark 10 France 64 Germany 145 India 262 Italy 7 Japan 5 Malaysia 9 Netherlands 9 Norway 407 Poland 42 Romania 92 Singapore 5 South Korea 1 Spain 23 Sweden 3 Thailand 15 United Kingdom 183 United States 115 122 123 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE S1-9 DIVERSITY METRICS Gender of company leadership, headcount as on 31 December 2024 Female Male Non-binary Members of Board of Directors 13 25 0 C-suite 6 19 0 Non-executive level management 17 69 0 Gender of company leadership, percentage of total as on 31 December 2024 Female Male Non-binary Members of Board of Directors 34% 66% 0% C-suite 24% 76% 0% Non-executive level management 20% 80% 0% Employee age groups, percentage of employees as on 31 December 2024 <30 years 19% 30-50 years 55% >50 years 26% Notes and deﬁnitions Within the European Economic Area (EEA), coverage of collective bargaining agreements and workplace representation (S1-8) is disclosed for countries in which we have signiﬁcant employment, deﬁned as at least 50 employees by headcount representing at least 10% of the total number of employees by the ESRS. At ENRX France and ENRX Germany, agreements are in place for employee representation by a Works Council. The deﬁnition of non-executive level management (S1-9) refers to the management team for each portfolio company excluding their respective C-suite positions. This is equivalent to the second level below the administrative and supervisory bodies, as deﬁned by the ESRS. The proportion of employees with disabilities (S1-12) is our best estimate based on available information. In some countries in which we operate, employers are not able to ask employees for their disability status as it is a protected characteristic, but employees may voluntarily report a dis- ability to request accommodations at work. In other parts of the Group, new employees complete a mandatory conﬁ- dential self-identiﬁcation questionnaire that is required by law to help identify under-represented groups and promote equity in the workplace. The ﬁgure disclosed is therefore based on available information from voluntary disclosures to HR or management, and where available, self-identiﬁca- tion questionnaires. No other assumptions or estimations were applied. Employee participation in performance and career development reviews, and in training programmes (S1-13), is measured differently in each company in the Group. This ﬁgure reﬂects the most accurate value available in each company, sometimes directly from a HR system and in other instances an estimate by the HR function. Work-related ill health (S1-14) can include acute, recurring, and chronic health problems caused or aggravated by work conditions or practices. These include musculoskel- etal disorders, skin and respiratory diseases, malignant cancers, diseases caused by physical agents (for example, noise-induced hearing loss, vibration-caused diseases), and mental illnesses (for example, anxiety, post-traumatic stress disorder). Work-related accidents are incidents relating to work that result in injury or ill health. Accidents related to commuting are only included if the employer organised the transportation. Number of days lost (S1-14) counts working days lost from an employee missing work for any of the reasons listed. Each day is counted as 1. The number of available work hours used in the calculation is an estimation based on standard working hours in contracts. Family-related leave (S1-15) includes maternity leave, pater- nity leave, parental leave, and carers’ leave (leave for workers to provide personal care or support to a relative, or a person who lives in the same household, in need of signiﬁcant care or support for a serious medical reason, as deﬁned by each state) that is available under national law or collective agree- ments. In some states, these include leave for adoption. Some employees are not eligible, as the national laws and agreements in certain countries in which ENRX operates do not mandate this. The gender pay gap (S1-16) calculates the difference between the average gross hourly pay level of male vs. female employees, as a proportion of the average gross hourly pay level of male employees. The gross hourly pay refers to the total annual remuneration paid to an employee divided by the number of hours they work in the year, where "remuneration" includes salary, bonus, stock awards, option awards, non-equity incentive plan compensation, change in pension value, and nonqualiﬁed deferred compensation earnings provided over the course of a year. The annual total remuneration ratio (S1-16) divides the annual total remuneration of the Group's highest paid individual by the median employee annual total remunera- tion (excluding the highest-paid individuals in each portfolio company). AFK Group Management was included as one company. This is not adjusted for purchasing power differ- ences between countries. S1-10 ADEQUATE WAGES In all parts of the Group, all employees are paid adequate wages, in line with applicable benchmarks. S1-11 SOCIAL PROTECTION In most countries across the Group, employees are typically covered by social protection, either through governmental programmes or through company beneﬁts, to protect them from a loss of income relating to major life events. All employees in Arendals Fossekompani Group’s own workforce are covered by social protection against a loss of income due to parental leave or retirement. Most employees in the Group are also covered by social protection against a loss of income due to sickness, unemployment starting from when the employee is working for the company, or employment injury or acquired disability. However, employees at the following sites are not covered in the event of all major life events: • ENRX’s employees in India who are not covered under the Employees’ State Insurance scheme are not protected against a loss of income relating to sickness or unemployment starting from when the employee is working for the company. • ENRX’s employees in Thailand are not fully protected in the event of employment injury or acquired disabil- ity, insofar as medical facilities are provided rather than a continuing salary. S1-12 PERSONS WITH DISABILITIES Estimate of the percentage of persons with disabilities amongst employees, subject to legal restrictions, as on 31 December 2024 % of employees with disabilities 0.6% S1-13 TRAINING AND SKILLS DEVELOPMENT Training and skills development indicators as on 31 December 2024 Male Female % of employees that participated in regular performance and career development reviews in 2024 79% 78% Average number of training hours in 2024 11 hours 13 hours S1-14 HEALTH AND SAFETY METRICS Health and safety management as on 31 December 2024 % of the workforce covered by a health and safety management system based on legal requirements and/or recognised standards or guidelines 80% Includes both employees and non-employees in the workforce Employees Non-employees in the workforce Other workers on the company’s sites Number of fatalities as result of work-related injuries and work-related ill health 0 0 0 Number of recordable work-related accidents 17 0 Rate of recordable work-related accidents 4 0 Number of cases of recordable work-related ill health 0 Number of days lost to work-related injuries and fatalities from work- related accidents, work-related ill health and fatalities from ill health 65 0 S1-15 WORK-LIFE BALANCE METRICS Family-related leave metrics as on 31 December 2024 Men Women Total % of employees entitled to take family-related leave 68% 71% 69% % of entitled employees who took family-related leave in 2024 6.8% 7.9% 7.0% S1-16 REMUNERATION METRICS Remuneration metrics as on 31 December 2024 Gender pay gap -3.7% Annual total remuneration ratio 6.1 124 125 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Governance G1 Business conduct 128 Entity-speciﬁc: cyber security 130 Signatures by the BoD and the CEO 131 126 127 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE G1 Business conduct SBM-3 MATERIAL RISKS Our global presence makes strong business conduct essential, and we strive to uphold a high standard of ethics in our business activities all around the world. With own operations in 21 countries and sourcing from and selling to many more, the most material impacts, risks and opportunities in terms of governance are business conduct risks. These risks do not affect the Group’s ﬁnancial position, but continuously managing them is core to delivering effectively on our strategy, such that practicing good business conduct is central to us. It is essential that we continue to prioritise our high standards of corporate management, transparency, internal controls and general business ethics. Arendals Fossekompani Group is continuously working on initia- tives that ensure our strategic resilience to this risk, as outlined throughout this chapter. Our risk assessment on this topic found that our business model and strat- egy should be resilient in the face of any adjustments required. This was conducted as part of our DMA, using the time horizons and methods outlined in IRO-1. Corporate culture Material risk: Dependency on corporate culture As a global player, Arendals Fossekompani and our port- folio have complex governance structures and conduct a wide range of business activities and interactions over four continents. We are reliant on maintaining strong integrity across the entire Group, to prevent compro- mising our reputation and to act responsibly. Any severe breach or incident relating to our corporate culture could cause reputational damage to the Group, and lead to discontented employees, customers or investors. Time horizon: Short tem Location in value chain: Own operations Corruption and bribery Material risk: Incidence of corruption Associated with our dependency on an ethical, consis- tent day-to-day implementation of our corporate culture, we are exposed to possible reputational damage in the event of any incidence of corruption. In particular, if an incident occurred in relation to sensitive or governmen- tal contracts, this could affect our ability to retain and renew important customers. Time horizon: Short term Location in value chain: Own operations Policies related to business conduct G1-1 BUSINESS CONDUCT POLICIES AND CORPORATE CULTURE At Arendals Fossekompani, ethical business conduct is anchored in our Code of Conduct and Business Code of Conduct, and detection and handling of cases is governed by our Whistleblower Policy. These policies are described in detail under S1: Own Workforce. Their use in managing our business conduct risks is outlined below. Code of Conduct (CoC) The CoC outlines clear principles and rules in key areas of compliance and integrity, such as anti-corruption and anti-bribery, facilitation payments, conﬂicts of interest, gifts and hospitality, human rights and labour rights, fair competition, anti-money laundering, sanctions and trade compliance, and so on. Arendals Fossekompani’s Chief Sustainability Ofﬁcer (CSO) reports to the Audit Committee on the design, implementation and effectiveness of our business integ- rity programme and activities, and on key performance indicators such as any incidences of corruption or the management of whistleblowing cases. The CSO ensures that the Code of Conduct is updated to reﬂect amend- ments of applicable laws, regulations and procedures. Training in the CoC and the incidence of internal or exter- nal cases of violation of the CoC are the primary indica- tors used to evaluate our corporate culture. Business Partner Code of Conduct (BPCoC) Across the Arendals Fossekompani Group, ethical business conduct is anchored in the respective Code of Conduct and Business Code of Conduct, and detection and handling of cases is governed by Whistleblower Policies or in the Code of Conduct. These policies address corruption, bribery and minimal standards of business conduct practices such as on market com- munication and disclosure, and in all companies except ENRX, the respect of sanctions. The policies are described in detail under S1: Own Workforce. Their use in managing Arendals Fossekompani ASA's business conduct risks is outlined below. Whistleblower Policy The Whistleblower Policy encourages the reporting of breaches of the CoC as outlined below and in the description of the Policy under S1: Own Workforce. In addition to the above policies, the following proce- dures and mechanisms are in place to prevent, detect, identify, investigate and address unlawful behaviour or other violations of the CoC. These mechanisms are in accordance with our CoC, Whistleblower Policy, Whistleblowing Procedure and Compliance Handbook. Arendals Fossekompani is committed to investigating business conduct incidents promptly, independently and objectively. Whistleblowing Employees and business partners are encouraged to immediately report any concern if they suspect or witness any unethical conduct, or a breach of the Code of Conduct or of other policies and applicable laws. Employees may also have a duty to report concerns under their employment contract or applicable laws. We encourage our portfolio companies, suppliers and business partners to report to Arendals Fossekompani any issues of concern. When appropriate, employees of portfolio companies, suppliers and business partners may use Arendals Fossekompani's third-party provider for whistleblowing (mittvarsel.no). Anyone who reports such matters will be protected from retaliation. Every report will be taken seriously and will be handled in an appropriate manner. Whistleblowers are entitled to con- ﬁdentiality in accordance with applicable laws. Every concern reported is taken seriously. Arendals Fossekompani ensures that any concerns brought forward are handled by persons that are free from any conﬂict of interest, or otherwise involved in the matter, in order to ensure sufﬁcient independence of assessment. Due diligence and risk management Arendals Fossekompani undertakes company-wide assessments of actual and potential compliance risks related to all operations, business relationships and supply chains. These take place at least once a year, with more frequent amendments where relevant based on the circumstances. The company’s business operations, business locations, interaction with governments, use of business partners and intermediaries, high-risk transac- tions, industry sector updates, regulatory landscape and other metrics collected must be assessed. Where business partner onboarding Integrity Due Diligence is required, it must assess the business and background of the party, its ultimate beneﬁcial owner- ship, the origin and destination of funds and property involved in the relationship, and risks relating to the country, potential bribery, corruption, sanctions vio- lations, and the potential violation of other laws and regulations. Arendals Fossekompani follows the OECD Guidelines for Multinational Enterprises, including its checklist for Responsible Business Conduct. Training on business conduct Upon joining Arendals Fossekompani ASA, all new employees are required to sign the Code of Conduct, which is also available publicly on our website at aren- dalsfossekompani.no. Training on the Code of Conduct, including on anti-corruption and anti-bribery, is delivered through online lessons. The training is required of all Arendals Fossekompani ASA’s employees, as well as in some portfolio companies. Where such training is in place, it is provided to new employees upon joining the company, and approximately every two years as a refresher for the rest of the workforce. Positions at risk Arendals Fossekompani identiﬁes the business opera- tions that face the highest risk of corruption and bribery as part of its risk management process. These typically include sites in countries that are perceived to consti- tute a higher risk by the Transparency International Corruption Perceptions Index, such as China and India. In addition, every company in the portfolio identiﬁes its own functions that present a particularly high risk of corruption and bribery, based on criteria such as the seniority of the position, the prevalence of corruption or bribery in their primary market of activity, their expo- sure to media and reputational leverage, and any other factors that apply. Typically, companies report that their management teams, procurement and sales tend to present the highest risk. 23% of functions-at-risk across the Group are currently reported to have completed training in anti-corruption and anti-bribery. Increasing the rate of training of func- tions-at-risk will be a focus area in 2025. In parts of the Group, this is attributable to new company leadership, while elsewhere updated trainings have been under development for early 2025. Regardless of training cov- erage, the Code of Conduct, including its anti-corruption and anti-bribery guidelines, applies mandatorily to all employees of all risk levels. Payments to authorities are reported under Financial Note 9. 128 129 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE G1-3 PREVENTION AND DETECTION OF CORRUPTION AND BRIBERY The Board of Directors, including its Audit Committee, is responsible for approving any modiﬁcations to the Code of Conduct. Training in the Code of Conduct has been offered to the entirety of Arendals Fossekompani ASA’s adminis- trative, supervisory and management bodies. 100% of Arendals Fossekompani ASA's and 56% of the Group's C-suite and non-executive management have com- pleted the training in full in 2024. Actions on risks relating to business conduct Arendals Fossekompani engages in initiatives aimed at addressing its risks to business conduct, and to ensure positive impacts are fostered, and negative impacts pre- vented or reduced. In 2024, we updated our policies and procedures such as the Code of Conduct and Business Code of Conduct, as well as the instructions to the Board of Directors and several of its committees. These updates consolidated the expected risk assessment by Arendals Fossekompani ASA on core issues relating to sustainability, and introduced minimum expectations on non-material areas such as political engagement, animal welfare and supplier management, to prevent the emer- gence of negative impacts or risks on those topics. In 2025, actions planned include: • Circulation of the new Code of Conduct with compa- nies in the portfolio, in particular through the Boards of Directors of each company, to encourage their adoption and ensure policy alignment across the Group; • Introduction of training on the Code of Conduct, including on anti-corruption and anti-bribery, in companies in which this has not yet taken place, and in particular for positions-at-risk, in an effort to strengthen our defences against the risks we face; • Launch of a new business partner risk identiﬁcation procedure at Arendals Fossekompani ASA to trigger the signature of the Business Partner Code of Conduct for prospective partners that are ﬂagged as high-risk. G1-4 INCIDENTS OF CORRUPTION OR BRIBERY There have been no convictions or conﬁrmed incidents of corruption or bribery brought against Arendals Fossekompani Group’s employees during the report- ing period. No ﬁnes for violation of anti-corruption and anti-bribery laws have been incurred. As a result, no actions beyond the preventative measures listed above have been taken in 2024 to address breaches in proce- dures and standards of anti-corruption and anti-bribery. Cyber security [entity-speciﬁc] SBM-3 MATERIAL RISK Information is a central and valuable resource for Arendals Fossekompani’s core business. Infrastructure in producing energy and handling sensitive materials, and online operations including software and client- facing services, are vulnerable to digital threats. With the increasing trends in digitalisation, globalisation and the international security landscape, along with the changes taking place in Information and Communications Technology (ICT), such risks are likely to increase in the future. Material risk: Exposure to critical cyber-attacks Parts of our Group operate in sensitive industries that are exposed to critical cyber-attacks, which poses a risk to some of our operations. Speciﬁcally, our energy-produc- ing infrastructure, software companies, and services to sensitive clients are at higher risk. Maintaining a strong information security infrastructure, along with associ- ated internal controls and personnel trainings, gener- ates ongoing costs to our companies. However, severe cyber-attacks have the potential to disrupt operations and delay our service delivery in far costlier ways, such that preventative measures are built into our business models, strategies, budgets and day-to-day deci- sion-making. Our risk assessment on this topic found that our business model and strategy should be resilient in the face of any adjustments required. This was con- ducted as part of our DMA, using the time horizons and methods outlined in IRO-1. Time horizon: Short term Location in value chain: Own operations Policies and actions on cyber security At Arendals Fossekompani ASA, cyber security and this material risk are governed by our ICT Security Policy. This policy outlines guidelines to protect the company's overall information portfolio in an appropriate manner, and to ensure that the business is compliant with laws and regulations, as well as general and industry- speciﬁc security standards. Our intention is tohave a security infrastructure and protocol proportional to the threats we face. The guidelines are approved by Arendals Fossekompani’s CEO and apply to everyone who has or will have access to the aforementioned resources, including Arendals Fossekompani ASA’s Board of Directors, employees, temporary workers and other hired personnel. The Policy is available to all Arendals Fossekompani ASA’s employees, and may also be shared with external functions as relevant. The Board of Directors is ultimately responsible for ICT security across the company, and must be informed annually about the ongoing work on ensuring our security in this regard. Every company’s ICT security risks are different. In accordance with the ICT Security Policy, Arendals Fossekompani expects the companies in our portfolio to have regularly updated internal policies and protocols of their own, to ensure that their information and data are protected and secure from unwanted breaches or incidents, and handled in such a manner that protect company-speciﬁc data and individual rights, and adhere to applicable external regulations. The Policy outlines Arendals Fossekompani ASA’s risk- based and comprehensive approach to ICT security, whereby a speciﬁc risk assessment must be con- ducted for the company's total information portfolio, and reviewed and updated as necessary. As part of the risk assessment, the value of the information must be assessed, vulnerabilities mapped and threats identiﬁed. Mapping of the company's ICT infrastructure, applica- tions, networks, users and suppliers must form a key part of the risk assessment. The protection of the company’s overall objectives of conﬁdentiality, integrity and acces- sibility must be ensured. Volue, ENRX, NSSLGlobal, Tekna, AFK Vannkraft and Alytic have ICT Security Policies with the same objec- tives as Arendals Fossekompani ASA. AFK Eiendom is considered too small for a dedicated policy of its own, but looks to Arendals Fossekompani ASA's policy. Actions undertaken in 2024 and planned for 2025 include: • An update to Arendals Fossekompani ASA’s ICT Security Policy was undertaken in 2024, including an update to the threats faced by the company and its subsidiaries in the evolving cyber security risk land- scape. Accordingly, updated training programmes were delivered in parts of the company, with further trainings elsewhere in the Group expected in 2025. • The ICT security training includes phishing and minimum employee vigilance, and is delivered through online lessons complemented by in-person sessions where relevant. The training is required of all Arendals Fossekompani ASA’s employees, as well as in some portfolio companies. • In addition, as part of its risk assessment on ICT security, Arendals Fossekompani Group identiﬁes the individuals and business operations that face the highest exposure to cyber-attacks, and takes appropriate measures to ensure that these functions are adequately trained to respond to the threats they face. This is undertaken on an ongoing basis. • Further preventative actions that occurred in 2024 are considered conﬁdential, and others are also in place or planned for 2025. Metrics and targets on cyber security Arendals Fossekompani Group collects metrics against established targets relating to cyber security. These are considered sensitive to the Group’s collective security and are not disclosed publicly. Froland, 10 April 2025 Trond Westlie, Chair Stine Rolstad Brenna, Board Member Lise Lindbäck, Board Member Morten Bergesen, Board Member Didrik Vigsnæs, Board Member Anne Grethe Dalane, Board Member Arild Nysæther, Board Member Benjamin Golding, Chief Executive Ofﬁcer Signatures by the BoD and the CEO of Arendals Fossekompani 130 131 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Financial Statements Consolidated ﬁnancial statements 134 Notes 142 132 133 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Statement of income (1 000 NOK) Group Parent Company Note 2024 2023 2024 2023 Revenue 4 319 188 3 883 853 361 114 503 750 Other Income 1,2 43 330 13 404 16 048 15 565 Revenue and other income 1 4 362 517 3 897 257 377 162 519 315 Materials and consumables used 1 867 580 1 487 238 2 579 2 002 Employee benefit expenses 4 1 294 249 1 227 180 82 585 75 506 Other operating expenses 7 593 974 571 870 103 503 92 090 Operating expenses 3 755 803 3 286 288 188 667 169 599 EBITDA 606 714 610 969 188 495 349 716 Depreciation 5 154 640 129 498 13 035 13 072 Amortisation 6 40 071 37 796 1 500 1 934 Impairment loss property, plant and equipment 5 4 426 - - - Impairment loss intangible assets 6 13 781 - - - Operating profit 393 797 443 675 173 960 334 711 Finance income 8 115 452 150 828 3 501 961 267 658 Finance costs 8 248 090 124 340 1 114 276 92 438 Net financial items -132 639 26 488 2 387 685 175 220 Share of profit or loss of associates and joint ventures 11 -33 821 -14 383 - - Profit before income tax 227 338 455 780 2 561 645 509 931 Income tax expense 9 269 654 394 471 138 297 298 818 Profit (-loss) from continuing operations -42 316 61 309 2 423 348 211 112 Profit (-loss) from discontinued operations 3 2 286 453 -90 829 - - Profit (-loss) for the year 2 244 137 -29 520 2 423 348 211 112 ATTRIBUTABLE TO Equity holders of the company 2 237 579 32 590 2 423 348 211 112 Non-controlling interests 6 558 -62 110 - - Total 2 244 137 -29 520 2 423 348 211 112 Basic/diluted earnings per share (NOK) 22 40.76 0.59 44.14 3.85 Basic/diluted earnings per share continued (NOK) 22 -0.89 2.25 - - Statement of comprehensive income (1 000 NOK) Group Parent Company Note 2024 2023 2024 2023 ITEMS THAT MAY BE RECLASSIFIED TO STATEMENT OF INCOME Total Effect from Foreign Exchange 112 017 85 136 - - Change on Cash flow hedges 941 5 535 - - Tax on cash flow hedges that may be reclassified to P&L 9 -207 -1 218 - - Items that may be reclassified to statement of income 112 751 89 453 - - ITEMS THAT WILL NOT BE RECLASSIFIED TO STATEMENT OF INCOME Change in financial assets at fair value through OCI 16 18 514 2 088 18 514 2 088 Actuarial gains and Losses 4 6 710 -1 431 8 168 -718 Tax on OCI that will not be reclassified to P&L 9 -1 797 -143 -1 797 158 Items that will not be reclassified to statement of income 23 427 513 24 885 1 528 Total Other Comprehensive Income (OCI) 136 179 89 967 24 885 1 528 Profit (-loss) for the year 2 244 137 -29 520 2 423 348 211 112 Total Comprehensive Income 2 380 316 60 446 2 448 233 212 640 Attributable to Equity holders of the company 2 350 831 99 043 2 448 233 212 640 Non-controlling interests 29 485 -38 597 - - Total 2 380 316 60 446 2 448 233 212 640 134 135 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Statement of financial position (1 000 NOK) Group Parent Company Note 2024 2023 2024 2023 ASSETS Property, plant and equipment 5 1 248 924 1 428 536 222 992 227 396 Intangible assets 6 1 006 576 2 376 559 5 298 6 797 Investments in associates and joint ventures 11 2 553 150 20 315 2 570 648 - Investment in subsidiaries 3,11 - - 1 559 587 1 811 429 Intercompany loans - non current - - 707 030 1 384 434 Net pension assets 4 35 584 28 270 21 848 13 369 Non-current receivables 12 106 549 177 453 68 917 56 642 Shares in other companies 12,16 74 652 88 283 68 562 77 275 Deferred tax assets 9 107 228 127 723 43 501 46 285 Non-current assets 5 132 662 4 247 139 5 268 383 3 623 627 Inventories 13 803 257 1 280 223 - - Contract assets 13 218 813 182 239 - - Accounts receivable 14 569 225 1 044 423 21 240 22 127 Other receivables 14 191 606 249 648 153 417 221 022 Derivatives - current assets 16 4 815 4 545 - - Other current assets 14 97 859 107 156 - - Cash and cash equivalents 15 1 799 668 1 928 652 913 390 1 064 083 Financial assets at fair value through OCI 16 34 421 15 907 34 421 15 907 Current assets 3 719 663 4 812 793 1 122 467 1 323 139 Total assets 8 852 326 9 059 932 6 390 850 4 946 766 Statement of financial position (1 000 NOK) Group Parent Company Note 2024 2023 2024 2023 EQUITY AND LIABILITIES Share capital 10 223 981 223 981 223 981 223 981 Other paid-in capital 28 127 25 604 28 160 25 604 Treasury shares -105 684 -112 938 -105 684 -112 938 Other reserves 102 868 59 634 17 972 1 866 Retained earnings 4 894 722 2 804 670 5 102 672 2 887 448 Capital and reserves attributable to owners of the company 5 144 014 3 000 952 5 267 102 3 025 962 Non-controlling Interests 11 270 016 637 581 - - Total equity 5 414 030 3 638 533 5 267 102 3 025 962 Non-current bond loans 17,25 498 503 498 042 498 503 498 042 Non-current interest-bearing debt 17,25 776 474 1 745 430 309 718 964 324 Pension liabilities 4 43 325 36 938 6 456 6 623 Other non-current liabilities 25 15 795 30 778 - - Deferred tax liabilities 9 45 116 132 939 - - Non-current lease liabilities 19,25 230 338 226 537 57 923 57 965 Non-current liabilities 1 609 551 2 670 664 872 599 1 526 954 Current interest-bearing debt 17,25 110 001 234 715 - - Bank overdraft 25 166 526 168 745 - - Derivatives - current liabilities 16 2 719 3 660 - - Accounts payable 18 276 936 512 917 17 726 11 852 Payable income tax 9 209 348 369 671 137 628 272 000 Contract liabilities 13 151 808 239 890 - - Current interest-bearing debt, intercompany - - - 36 416 Current lease liabilities 19 60 437 65 762 2 127 2 293 Current provisions 18 86 652 56 688 37 500 1 600 Other current liabilities 18 764 319 1 098 687 56 168 69 690 Current liabilities 1 828 745 2 750 735 251 149 393 850 Total liabilities and equity 8 852 326 9 059 932 6 390 850 4 946 766 Froland, 10 April 2025 Trond Westlie, Chair Stine Rolstad Brenna, Board Member Lise Lindbäck, Board Member Morten Bergesen, Board Member Didrik Vigsnæs, Board Member Anne Grethe Dalane, Board Member Arild Nysæther, Board Member Benjamin Golding, Chief Executive Officer 136 137 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Statement of cash flows (1 000 NOK) Group Parent Company Note 2024 2023 2024 2023 CASH FLOW FROM OPERATING ACTIVITIES Net profit for the year 2 244 137 -29 520 2 423 348 211 112 ADJUSTED FOR Depreciation, impairment and amortization 970 178 319 914 14 535 15 006 Gain on disposal of Volue ASA 3,8 -3 013 547 - -3 265 046 - Loss on disposal of Commeo 3,8 - - 965 788 - Net financial items other 8 133 584 9 653 -88 427 -175 220 Share of profit from associates and joint ventures 39 084 31 382 - - Gain/loss from sales of assets 3 700 2 302 - -580 Tax expense 275 575 420 547 138 297 298 818 Change in inventories 328 924 -404 443 - - Change in trade and other receivables 107 974 23 957 -18 008 -3 274 Change in trade and other payables -101 104 -521 964 5 915 -509 Cash flow from internal accounts payable and receivable - - 13 926 10 867 Change in other current assets 27 841 -61 962 - - Change in other current liabilities 112 060 291 816 -6 476 -20 674 Change in other provisions -3 818 1 965 - - Change in employee benefits -3 155 8 336 -477 -1 781 Tax paid -377 947 -490 373 -255 627 -400 427 Net cash from operating activities A 743 487 -398 391 -72 254 -66 661 CASH FLOW FROM INVESTING ACTIVITIES Interest received 8 99 800 94 789 44 527 115 151 Dividends received 8 383 3 234 107 676 99 627 Proceeds from the sales of PPE 13 341 1 078 240 878 Purchase of PPE and intangible assets -477 024 -648 330 -6 617 -11 290 Purchase of shares in associates -5 852 - - - Purchase of shares in subsidiaries (reduced by cash balance) 3 - -476 565 - - Purchase of financial assets at fair value - -2 081 - -2 081 Proceed from sale of financial assets at fair value - 93 - 93 Purchase of other investments -20 609 -16 161 - - Proceed from sale of other investments -4 084 21 001 -27 410 20 608 Group Contribution - - -16 056 9 462 Cash flow from other investing activities 20 188 - 20 188 - Cash flow from internal loans and borrowings - - -129 883 -761 615 Transactions with investments from subsidiaries -13 563 - -90 295 -78 219 Proceeds from the sales of shares in subsidiaries 714 577 11 774 1 008 528 11 776 Net cash from investing activities B 327 157 -1 011 169 910 898 -595 611 Statement of cash flows (1 000 NOK) Group Parent Company Note 2024 2023 2024 2023 CASH FLOW FROM FINANCING ACTIVITIES Equity payments from/ to non controlling interests 25 605 -10 260 - - Cash from new borrowings 25 249 599 1 322 068 188 474 825 485 Repayment of long-term borrowings 25 -1 084 816 -162 291 -876 002 -2 293 Cash flow from net change in current interest bearing debt 25 35 973 277 552 -166 -7 Interest paid and realized currency gains/losses 8 -206 104 -137 058 -84 690 -43 809 Dividend paid -250 298 -251 175 -219 511 -216 532 Cash flow from treasury shares 11 034 878 9 810 878 Cash Flow from Other Financing Activities -36 519 7 475 -7 252 2 283 Net cash from financing activities C -1 255 526 1 047 188 -989 337 566 005 Cash flow A+B+C -184 882 -362 372 -150 693 -96 267 Opening balance for cash and cash equivalents 1 928 652 2 212 495 1 064 083 1 160 349 FX effects on cash accounts 55 898 78 530 - - Closing balance for cash and cash equivalents 1 799 668 1 928 652 913 390 1 064 083 Unused credit facilities 2 194 085 2 194 085 1 131 526 1 131 526 138 139 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Statement of changes in equity (1 000 NOK) Group Note Share capital Other paid-in capital Treasury shares Other reserves Retained earnings Owner's equity Non- controlling Interests Total equity Balance at 1 January 2023 223 981 21 800 -110 012 4 748 2 982 317 3 122 835 661 511 3 784 346 Profit (-loss) for the year - - - - 32 590 32 590 -62 110 -29 520 Total Other Comprehensive Income (OCI) - - - 62 626 3 288 65 913 24 053 89 967 Effect of share based payment 4 - - - 11 319 11 319 2 708 14 027 Treasury shares 3 804 -2 926 2 166 3 044 2 269 5 313 Transactions with non-controlling interests 8 - - - -32 443 22 863 -9 580 8 958 -622 Capital changes from subsidiaries - - - 13 384 -14 300 -916 26 150 25 234 Dividends paid 10 - - - - -224 254 -224 254 -25 958 -250 212 Balance at 31 December 223 981 25 604 -112 938 59 634 2 804 670 3 000 952 637 581 3 638 533 Balance at 1 January 2024 223 981 25 604 -112 938 59 634 2 804 670 3 000 952 637 581 3 638 533 Profit (-loss) for the year - -33 - -69 522 2 307 135 2 237 579 6 558 2 244 137 Total Other Comprehensive Income (OCI) - - - 107 049 6 203 113 252 22 927 136 179 Effect of share based payment 4 - - - 5 707 -1 488 4 219 - 4 219 Treasury shares 2 556 7 254 - 1 167 10 977 58 11 034 Disposal group 3 - - - - - - -369 410 -369 410 Dividends paid 10 - - - - -222 965 -222 965 -27 698 -250 662 Balance at 31 December 223 981 28 127 -105 684 102 868 4 894 722 5 144 014 270 016 5 414 030 Statement of changes in equity (1 000 NOK) Parent Company Note Share capital Other paid-in capital Treasury shares Other reserves Retained earnings Owner's equity Non- controlling Interests Total equity Balance at 1 January 2023 223 981 21 800 -110 012 -1 833 2 893 428 3 027 365 3 027 365 Profit (-loss) for the year - - - - 211 112 211 112 - 211 112 Total Other Comprehensive Income (OCI) - - - 2 088 -560 1 528 - 1 528 Effect of share based payment 4 - - - 1 611 - 1 611 - 1 611 Treasury shares - 3 804 -2 926 - - 878 - 878 Dividends paid 10 - - - - -216 532 -216 532 - -216 532 Balance at 31 December 223 981 25 604 -112 938 1 866 2 887 448 3 025 962 - 3 025 962 Balance at 1 January 2024 223 981 25 604 -112 938 1 866 2 887 448 3 025 962 3 025 962 Profit (-loss) for the year - - - - 2 423 348 2 423 348 - 2 423 348 Total Other Comprehensive Income (OCI) - - - 18 514 6 371 24 885 - 24 885 Effect of share based payment 4 - - - -2 408 5 016 2 608 - 2 608 Treasury shares - 2 556 7 254 - - 9 810 - 9 810 Dividends paid 10 - - - - -219 511 -219 511 - -219 511 Balance at 31 December 223 981 28 160 -105 684 17 972 5 102 672 5 267 102 - 5 267 102 140 141 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Notes to the annual and consolidated ﬁnancial statements for 2024 Accounting policies INFORMATION ABOUT THE COMPANY Arendals Fossekompani ASA is domiciled in Norway, and with headquarters in Bøylefoss, in the Municipality of Froland. The consolidated ﬁnancial statements for ﬁnancial year 2024 include the company and its subsidiaries (as a whole, referred to as "the Group"). Information about the companies included in the scope of consolidation is disclosed in Note 11, together with information about Group investments in associates. BASIS FOR PREPARATION The annual and consolidated ﬁnancial statements have been prepared in accordance with IFRS® Accounting Standards as adopted by the European Union and asso- ciated interpretations, as well as Norwegian disclosure requirements pursuant to the Norwegian Accounting Act applicable as of 31 December 2024. The annual and consolidated ﬁnancial statements were approved by the board of directors on 10 April 2025. The annual and consolidated ﬁnancial statements will be submitted for adoption at the Annual General Meeting scheduled for 15 May 2025. The board is authorised to amend the annual and consolidated ﬁnancial statements until ﬁnal adoption. The ﬁnancial statements are presented in Norwegian kroner (NOK), which is the functional currency of the parent company. All amounts disclosed in the ﬁnancial statements and notes have been rounded off to the nearest thousand NOK units unless otherwise stated. The ﬁnancial statements have been prepared using the historical cost principle, with the exception of the following assets, which are presented at fair value: Financial instruments at fair value through proﬁt or loss and ﬁnancial instruments at fair value through other comprehensive income. The Group recognises changes in equity arising from transactions with owners in the statement of changes in equity. Other changes in equity are presented in the statement of comprehensive income (total return). Preparation of ﬁnancial statements in accordance with IFRS requires the use of assessments, estimates and assumptions that inﬂuence which accounting policies shall be applied, and also inﬂuence recognised amounts for assets and liabilities, revenues and costs. Actual amounts can deviate from estimated amounts. Estimates and underlying assumptions are reviewed on an ongoing basis. Changes in accounting estimates are recognised in the period in which they arise if they only apply to that period. If the changes also apply to subse- quent periods, the effect is allocated over the current and subsequent periods. Areas with signiﬁcant estimation uncertainties, and where assumptions and assessments made have sig- niﬁcantly inﬂuenced the application of the accounting policies, are disclosed in Note 21. ACCOUNTING POLICIES The accounting policies applied in the preparation of the annual and consolidated ﬁnancial statements are described below. With the exception of effects described in the section on changes in accounting policies below, the policies are applied consistently for all periods. In case that subsidiaries have used other principles to prepare their separate annual ﬁnancial statements, adjustments have been made so the con- solidated ﬁnancial statements are prepared according to common policies. PRINCIPLES OF CONSOLIDATION Segment reporting Financial information for the operating segments is determined and presented based on the information provided to the company's board of directors, which is the Group's ultimate decision-maker. FOREIGN CURRENCY TRANSLATION Transactions in foreign currencies Transactions in foreign currencies are translated to the functional currency of each individual Group company using the exchange rates at the dates of the transac- tions. Monetary assets and liabilities in foreign curren- cies are translated to NOK using the exchange rate at the balance sheet date. Differences that arise from the currency translation are recognised in the income statement. Financial statements of foreign operations Assets and liabilities in foreign currencies are trans- lated to NOK using the exchange rate at the balance sheet date. Foreign exchange gains/losses related to sales are presented as part of sales, foreign exchange gains/losses related to purchases are presented as part of cost of materials, and foreign exchange gains/losses related to ﬁnancing is presented as part of ﬁnancial items. HEDGING ACTIVITIES Cash ﬂow hedge When a derivative is designated as a hedging instru- ment on variability in cash ﬂows for a recorded asset or liability, or for a highly probable forecast transaction, the effective portion of a change in fair value is rec- ognised in other comprehensive income. The Group performs a qualitative assesment of hedging effective- ness. A hedging instrument is derecognised when it no longer satisﬁes hedge accounting criteria, sold, termi- nated or matures. The accumulated change in fair value recognised in other comprehensive income remains until the forecast transaction occurs. If the hedged item is a ﬁnancial asset, the amount recognised in other com- prehensive income is transferred to to the income state- ment in the same period as the hedged item affects the income statement. If the hedged transaction is no longer expected to occur, the accumulated unrealised gains or losses are immediately recognised in the income statement. EQUITY Ordinary shares Ordinary shares are classiﬁed as equity. Costs asso- ciated with the issuance of shares are recognised as a reduction in net equity (share premium) after tax, if applicable. Purchase and sale of treasury shares On the repurchase of treasury shares, the purchase amount including directly attributable costs are rec- ognised as a change in equity. Purchased shares are clas- siﬁed as treasury shares and reduce total equity. When treasury shares are sold, the received amount is recorded as an increase in equity, and the subsequent gain on the transaction is recognised in Other paid-in equity. Depreciation Depreciation is calculated using the straight-line method over the estimated useful lifetime for each item of property, plant and equipment, and charged to the income statement. Land is not depreciated. Estimated economic lifetimes are as follows: ESTIMATED ECONOMIC LIFETIMES Watercourse regulations 40–50 years Power generation Buildings 50 years Dams, water ways, hatches 25-40 years Machine equipment 40 years Thermal power plant (Spain) 25 years Industrial activities Buildings 20–25 years Machinery and equipment 7–15 years Operational moveable property, vehicles, equipment etc. 3–12 years Residual value is assessed annually unless it is immaterial. Construction contracts The booked value of construction contracts consists of earned, non-invoiced income under the percent- age-of-completion method, less received advance payments. The amount is recognised in the balance sheet under trade and other receiva-bles. The net worth is classiﬁed as contract assets. Long-term manufactur- ing contracts where the customer has paid more than the earned contract value on the balance sheet date are classiﬁed as contract obligations. See also the section below on operating income and Note 13. EMPLOYEE BENEFITS Share-based compensation For share-based compensation by equity instru-ments granted that do not vest until the employee completes a speciﬁed period of service, it is assumed that the services to be rendered as consideration for the equity instruments will be received in the future, during the vesting period. Such services are accounted for as they are rendered by the employee during the vesting period, with a corresponding increase in equity. OPERATING INCOME Goods sold and services rendered Operating revenue is recognised when perfor-mance obligations are satisﬁed through the transfer of a good or service to the the customer, either over time or at a point in time. By transfer is meant that the customer has obtained control of the good or service. The most cen- tral indicators of transfer of control is that the Group has obtained the right to payment for the good or service, that the customer has obtained the right to the good or service, that the Group has transferred physical control of the good or service, that the customer has taken on the signiﬁcant risks and rewards related to ownership of the good or service. Operating revenue is presented net of sales-related taxes and rebates. Revenue related to ﬁxed-price contracts where the deliverable is tailored to the customer, does not have an alternative use and where the Group obtains the right to payment based on the projects progress is recognised over time as long as the projects revenue and expenses can be estimated reliably. When the project’s result cannot be estimated reliably, only revenue correspond- ing to expenses incurred may be recognised. Losses related to onerous contracts are recognosed in the period they are identiﬁed. Depending on the type of project, progress is esti- mated based on costs incurred in relation to total estimated costs, as direct hours incurred in relation to total expected hours or by assessing technical grade of completion. Estimates related to revenues, expenses and progress are revised when assumptions change. Change in estimates are recognised in the income statement in the period management becomes aware of the change of assumptions that caused the change in estimate. 142 143 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE In ﬁxed-price contracts the customer normally pays ﬁxed amounts through the project period based on a payment plan. A contract asset is recognised if, at the measurement date the value of the deliverable at the exceeds payments received from the customer. A con- tract liability is recognised payment from the customer exceeds the value of the deliverable at the measure- ment date. Revenue from energy sales is recognised at the transac- tion date. GOVERNMENT GRANTS Government grants that compensate for incurred expenses are recognised as a cost reduction in the income statement on a systematic basis in the same periods in which the expenses are incurred. Grants related to the acquisition of operating assets are recognised as reduction of cost and amortised by reducing amortisation over the operating asset’s useful economic life. CASH AND CASH EQUIVALENTS Cash means cash in hand and in the bank. Cash equivalents are short-term liquid investments that can be converted to cash within three months to a known amount and which have an insigniﬁcant degree of risk. Cash and cash equivalents in the cash ﬂow statement do not include unused overdrafts. NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS The Group classiﬁes non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classiﬁed as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding ﬁnance costs and income tax expense. Note 1 (1000 NOK) Segment reporting per 31.12. Group Management AFK Vannkraft NSSLGlobal ENRX Tekna Alytic Property Other Total Segment Eliminations & Adjustments Total Consolidated 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 Sales at a point in time 53 360 999 503 750 1 399 388 1 203 525 898 429 913 885 216 862 212 174 65 380 45 742 287 789 10 941 1 001 516 3 229 902 2 890 533 3 230 017 2 890 533 Sales over time 1 015 685 885 888 73 486 107 029 332 71 1 089 170 993 320 1 089 170 993 320 Other Income 17 336 12 684 2 191 6 817 509 2 612 9 007 4 289 31 917 8 528 1 240 446 6 954 6 412 10 711 -93 79 865 41 694 -36 687 -28 290 43 330 13 404 Revenue and other income 17 390 12 684 363 190 510 567 1 399 897 1 206 137 1 923 121 1 804 062 322 265 327 730 66 621 46 188 294 743 17 685 11 712 494 4 398 937 3 925 547 -36 687 -28 290 4 362 517 3 897 257 Operating expense 92 102 87 467 101 742 85 382 1 105 098 975 289 1 700 675 1 605 918 353 590 391 661 115 998 117 666 265 671 15 211 41 239 25 174 3 776 113 3 303 768 -20 546 -17 480 3 755 803 3 286 288 Depreciation, amortization, impairment 5 838 3 358 8 716 11 657 31 399 19 557 88 403 82 516 31 545 33 036 38 249 13 321 16 520 12 227 4 561 576 225 231 176 247 -12 314 -8 953 212 917 167 294 Operating proﬁt -80 551 -78 140 252 733 413 528 263 400 211 291 134 043 115 628 -62 870 -96 966 -87 626 -84 799 12 552 -9 753 -34 088 -25 256 397 593 445 532 -3 827 -1 857 393 797 443 675 Income from associates 967 1 087 9 -4 755 -1 126 976 -4 793 -34 796 -9 590 -33 821 -14 383 Net ﬁnancial items -642 422 175 215 12 862 -3 234 -80 786 -44 224 -15 901 -4 973 -1 537 -541 -11 748 -3 847 -50 815 4 669 -790 348 123 064 657 981 -96 576 -132 639 26 488 Income tax expense -17 352 4 971 155 930 294 058 74 805 44 757 44 498 43 361 6 677 11 476 -3 639 -4 841 8 684 232 -3 6 269 599 394 020 451 451 269 654 394 471 Proﬁt (-loss) for the period from continued operations -705 621 92 104 96 803 119 470 202 424 164 388 8 759 28 042 -85 439 -118 170 -85 524 -80 500 -7 880 -13 832 -84 900 -21 719 -661 378 169 783 618 907 -108 474 -42 316 61 309 Total assets 6 155 332 4 723 264 239 113 227 280 1 258 356 1 066 740 2 372 107 2 014 539 576 252 585 469 255 304 224 796 523 170 621 795 64 877 981 665 11 444 511 10 445 547 -2 592 791 -1 385 615 8 852 326 9 059 932 Total liabilities 949 179 1 638 939 179 511 285 219 533 368 458 674 1 862 777 1 597 622 366 852 291 026 107 886 85 263 330 127 436 921 1 016 289 1 067 567 5 345 989 5 861 232 -1 908 144 -439 832 3 438 296 5 421 400 Net interest bearing debt -43 387 496 768 -473 752 -346 420 1 053 958 776 613 172 321 125 011 13 815 4 163 212 686 360 721 1 005 715 879 061 1 088 812 693 707 -1 886 862 321 567 54 222 1 015 274 The criteria for held for sale classiﬁcation is regarded as met only when the sale is highly probable, and the asset or disposal group is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that signiﬁcant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classiﬁcation. Property, plant and equipment and intangible assets are not depreciated or amortised once classiﬁed as held for sale. Assets and liabilities classiﬁed as held for sale are presented separately as current items in the statement of ﬁnancial position. Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as proﬁt or loss after tax from discontinued operations in the statement of proﬁt or loss. Cash ﬂows from discontinued operations are included in the consolidated statement of cash ﬂows and are disclosed separately. The Group includes proceeds from disposal in cash ﬂows from discontinued operations. All other notes to the ﬁnancial statements include amounts for continuing operations, unless indicated otherwise. ACCOUNTING STANDARDS AND INTER- PRETATIONS ISSUED BUT NOT ADOPTED The company has not early-adopted any IFRS standards or IFRIC that have been issued but are not mandatory as of 31 December 2024. Based on the assessments made so far, it is assumed that coming standards and IFRIC approved by the EU will not have a material effect on the ﬁnancial statements. No new standards have been adopted by the Company and the Group with effect from 1 January 2024. 144 145 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE 146 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Segment reporting Financial information for the operating segments is determined and presented based on the information provided to the company's board of directors, which is the Group's ultimate decision-maker. Due to the sale of shares in Volue and Vergia, as well the ﬁling for insol- vency of Commeo, these disposed groups are no longer reported as segments. The remaining companies in the Ampwell group are reported as Other in the segment note. We also refer to note 3. SHORT DESCRIPTION OF THE OPERATING SEGMENTS AFK Vannkraft AFK Vannkraft generates power at two locations in the Arendal watercourse. The Bøylefoss and Flatenfoss hydropower plants produce on average more than 500 GWh annually. All ﬁnancial items have been allocated to Group Management segment. Group Management Combining industrial, technological and capital markets expertise, Arendals Fossekompani’s Group Management identiﬁes and develops opportunities for sustainable value creation. As an active owner of our portfolio com- panies, we support management in target setting, strat- egy development, performance management, M&A and ﬁnancing, and work to build strong boards, management teams and leaders to ensure long-term sustainable value creation. In every investment, we have a long-term view of our objectives. We retain ownership of our portfolio companies as long as we are the best owner, ensuring long-term value and stability. NSSL Global NSSLGlobal is an independent provider of cyber secure satellite and mobile communications, and IT support that delivers high-quality voice and data services across the globe, regardless of location or terrain. NSSLGlobal’s activities are divided into four main areas: Airtime, Projects, Hardware and Service. Its main customers are within the maritime segment, the military and govern- ment sector, large international corporations, and the energy sector. The revenue model is to a large degree based on multi-year subscription and support contracts, thereby securing a signiﬁcant recurring revenues. ENRX Leveraging decades of experience, ENRX combines global market leadership for industrial induction heating systems (Heat) with leading technology in the high- growth market for wireless induction charging solutions (Charge). Industries served by ENRX include automotive, renewable energy/wind energy, pipe fabrication, elec- tronics, cable and mechanical engineering. The company has operations in 15 countries. Tekna Tekna is a world-leading provider of advanced materials and plasma systems to several industries. Tekna pro- duces high-purity metal powders for applications such as 3D printing in the aerospace, medical and consumer electronics sectors, as well as optimised induction plasma systems for industrial research and production. With its unique, IP-protected plasma technology, the company is well positioned in the growing market for advanced nanomaterials within the microelectronics industry. AFK Eiendom AFK Eiendom comprises all property related companies and property investments in Arendals Fossekompani. Alytic Alytic acts as a growth catalyst for future-oriented companies and works to establish leading businesses within their respective industries. The Alytic investment team collaborates closely with their portfolio companies to drive value through strategic development, leadership support, sales enhancement, HR and talent acquisition, and by leveraging data science and technology. The current Alytic portfolio of companies includes Kontali, a world-leading aquaculture data and analyses provider, Veyt, a market intelligence provider for low carbon mar- kets, Factlines, a technology provider for ESG reporting., and Utel, a provider of services for telecom network monitoring and analysis." INTRODUCTION ABOUT PERFORMANCE CORPORATE GOVERNANCE SUSTAINABILITY FINANCIAL SIGNATURES 147 Note 1 Segment reporting cont. (1 000 NOK) GEOGRAPHICAL SEGMENTS Norway Europe Asia North America Consolidated 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 Revenue 848 639 692 554 1 952 409 1 256 466 875 639 1 225 812 685 831 722 426 4 362 517 3 897 257 Segment assets 4 908 242 1 695 074 2 292 930 5 189 719 775 902 1 374 982 875 252 800 157 8 852 326 9 059 932 SEGMENT REVENUE IS BASED ON LOCATION OF THE CUSTOMERS Parent Company AFK Vannkraft Group Management Total 2024 2023 2024 2023 2024 2023 Revenue and other income 363 305 510 567 13 857 8 748 377 162 519 315 Operating expenses 104 311 85 382 84 357 84 216 188 667 169 599 Depreciation, amortization and impair- ment 8 716 11 657 5 819 3 349 14 535 15 006 Operating income 250 279 413 528 -76 319 -78 817 173 960 334 711 Net ﬁnancial items 2 387 685 175 220 2 387 685 175 220 Income tax expense 155 534 294 058 -17 236 4 760 138 297 298 818 Proﬁt (-loss) continuing operations 94 745 119 470 2 328 603 91 643 2 423 348 211 112 Total assets 239 092 227 280 6 151 758 4 719 486 6 390 850 4 946 766 Total liabilities 178 475 285 219 945 273 1 635 585 1 123 748 1 920 804 Net interest bearing debt -43 387 496 767 -43 387 496 767 Note 2 Other income (1 000 NOK) Group Parent Company 2024 2023 2024 2023 Other 36 488 9 215 7 240 6 237 Other income, intercompany 8 807 8 748 Gain sales of assets 656 1 314 580 Grants/subsi- dies 6 186 2 875 Other income 43 330 13 404 16 048 15 565 148 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Note 3 Discontinued operations Note 3.1 Sale of subsidiary - Vergia Sale of Vergia in 2024 In July 2024, Arendals Fossekompani sold its 100% shareholding in Vergia. Consequently, the company’s ﬁnancial results have been recognised on separate lines in the income statement as discontinued operations. The gain on disposal of Vergia of MNOK 17 is included in “Proﬁt/loss from discontinued operations”. Vergia’s key ﬁgures relating to the income statement for 2024 (until transac- tion date), and comparative ﬁgures for 2023 are presented below. Amount in MNOK 2024 2023 OPERATING REVENUES AND OPERATING COSTS Operating revenue 1 Operating expense 4 9 Operating proﬁt -3 -8 Net ﬁnancial items -1 -1 Share of proﬁt or loss of associates and joint ventures -5 -17 Proﬁt before income tax -10 -26 Proﬁt (-loss) from discontinued operations -10 -26 Gain on disposal of Vergia 17 Net discontinued operations income (after tax) 7 -26 Basic/diluted earnings per share (NOK) 0,13 -0,47 Net cash from operating activities -4,6 -15 Net cash from investing activities -6,2 -9 Net cash from ﬁnancing activities 7,7 9 Cash Flow -3 -15 Note 3.2 Insolvency of subsidiary - Commeo Germany Insolvence of Commeo Germany in 2024 Commeo is a subsidiary of AFK's portfolio company, Ampwell. Ampwell was established in 2022 to build an eco-system for battery technology and a Battery-as-a-Service model. The investment in Commeo was made in April 2022. The Commeo companies in Germany ﬁled for insolvency in July 2024. All companies are subsidiaries of Arendal Fossekompani. Consequently, these company’s ﬁnancial results have been recognised on separate lines in the income statement as discontinued operations. After insolvency of Commeo Germany, Ampwell is no longer considered as own reporting segment. The remaining Ampwell companies are now included in reporting segment Other. The impairment losses of total NOK 613 million related to the insolvency of Commeo are presented as “Proﬁt/loss from discontinued operations” in the Group accounts and include the impairment of property, plant and equipment of NOK 236 million, the impairment of intangible assets of NOK 96 million as well the impairment of the entire goodwill of NOK 281 million related to the acquisition of Commeo. Commeo Germany’s key ﬁgures relating to the income statement for 2024 (until ﬁling date for insolvency), and comparative ﬁgures for 2023 are presented below. Amount in MNOK 2024 2023 OPERATING REVENUES AND OPERATING COSTS Operating revenue 30 60 Operating expense 208 118 Depreciation and amortisation 15 24 Operating proﬁt -193 -82 Net ﬁnancial items -19 Proﬁt before income tax -193 -101 Income tax expense 3 1 Proﬁt (-loss) from discontinued operations -190 -101 Impairment losses related to insolvency of Commeo 613 Net discontinued operations income (after tax) -803 -101 Basic/diluted earnings per share (NOK) -11.17 -1.84 Net cash from operating activities -71 -179 Net cash from investing activities -14 -173 Net cash from ﬁnancing activities 53 379 Cash Flow -32 26 INTRODUCTION ABOUT PERFORMANCE CORPORATE GOVERNANCE SUSTAINABILITY FINANCIAL SIGNATURES 149 Note 3.3 Sale of subsidiary - Volue Sale of Volue in 2024 In October 2024 Arendals Fossekompani sold its 60% shareholding in Volue ASA. Arendals Fossekompani has subsequently acquired a 40% indirect ownership of Volue via the associated company Faraday Topco AS. The gain on partial disposal of Volue of NOK 3,014 million is included in “Proﬁt/loss from discontinued operations” in the group accounts. In the parent company ﬁnancial statements, the gain of NOK 3,265 million related to sale of Volue is presented as ﬁnancial income. The sale of Volue contributed with cash proceeds of NOK 3,569 million to the company. Volue’s key ﬁgures relating to the income statement for 2024 (until transaction date) and comparative ﬁgures for 2023 are presented below. Amount in MNOK 2024 2023 OPERATING REVENUES AND OPERATING COSTS Operating revenue 1 335 1 489 Operating expense 1 107 1 281 Depreciation 15 40 Amortisation 118 88 Operating proﬁt 95 94 Net ﬁnancial items -17 -17 Proﬁt before income tax 78 77 Income tax expense 9 27 Proﬁt (-loss) from discontinued operations 69 50 Gain on disposal of Volue shares 3 014 Net discontinued operations income (after tax) 3 083 50 Basic/diluted earnings per share (NOK) 56.15 0.92 150 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Amount in MNOK 2024 2023 OPERATING REVENUES AND OPERATING COSTS Net cash from operating activities 378 -97 Net cash from investing activities -444 -531 Net cash from ﬁnancing activities -122 347 Cash Flow -187 -282 DETAILS OF THE SALE OF SUBSIDIARY VOLUE ASA: Consideration received Cash 1 055 Offset debt and transaction cost 154 Promissory note 2 417 Total disposal consideration 3 625 Transaction costs -56 Carrying amount of net assets sold, excl. NCI -556 Gain on sale of shares in Volue ASA 3 014 The carrying amounts of assets and liabilities as at the date of sale (27 October 2024) on 100% basis were: 27 October 2024 Intangible assets 1 202 Property, plant and equipment 188 Deferred tax assets 47 Other non-current assets 32 Inventories 34 Contract assets 105 Accounts receivable 210 Other receivables 108 Cash and cash equivalents 294 Total assets 2 219 Non-current interest-bearing debt -193 Other non-current liabilities -11 Deferred taxes -90 Non-current RoU liabilities -103 Accounts payable -86 Current interest-bearing debt -173 Payable income tax -69 Contract liabilities -123 Current RoU liabilities -36 Other current liabilities -418 Total liabilities -1 301 Net assets 918 INTRODUCTION ABOUT PERFORMANCE CORPORATE GOVERNANCE SUSTAINABILITY FINANCIAL SIGNATURES 151 Note 4 Employee beneﬁts Note 4.1 Employee beneﬁt expenses (1 000 NOK) Group Parent Company 2024 2023 2024 2023 Salaries 1 166 572 1 011 169 60 557 55 345 Social security contributions 154 192 228 811 10 207 10 566 Pension costs 45 489 40 623 5 169 4 762 Capitalised cost -96 094 -79 548 Share-based payments 5 707 3 212 2 608 1 611 Other beneﬁts 18 383 22 913 4 043 3 221 Total employee beneﬁts 1 294 249 1 227 180 82 585 75 506 Average number of full-time headcounts 1 761 1 752 37 37 2024 Salaries, fees Bonus paid out this year Beneﬁts in kind Total remu- neration Share-based payment Paid-in pension contribution Number of board meetings (i) SENIOR EXECUTIVES Benjamin Golding, CEO 4 107 1 987 24 6 118 437 129 Lars Peder Fensli, CFO 2 912 772 14 3 698 389 137 Håkon Tanem, Executive Vice President 2 575 - 53 2 628 281 135 Torkil Mogstad, Executive Vice President 2 262 426 38 2 726 295 89 Ingunn Ettestøl, ESG Director 1 896 505 26 2 427 260 160 Ann-Kari A. Heier, Executive Vice President 1 792 200 38 2 030 137 164 Total remuneration 15 544 3 890 193 19 627 1 799 814 2024 Salaries, fees Bonus paid out this year Beneﬁts in kind Total remu- neration Share-based payment Paid-in pension contribution Number of board meetings (i) BOARD MEMBERS Trond Westlie, Chairman, (iii) 1 119 1 119 17 Morten Bergesen, Deputy Chairman, (ii), (iv) 483 483 17 Didrik Vigsnæs, Board Member, (iii) 423 423 17 Christian Must, Board Member until 15.05.2024 (iii) 156 156 5 Arild Nysæther, Board Member from 15.05.2024 225 225 12 Stine Rolstad Brenna, Board Member, (ii) 477 477 17 Lise Lindback, Board Member, (iii) 398 398 17 Anne Grethe Dalane, Board member, (ii) 453 453 17 Total remuneration 3 734 3 734 152 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 2023 Salaries, fees Bonus paid out this year Beneﬁts in kind Total remu- neration Share-based payment Paid-in pension contribution Number of board meetings (i) SENIOR EXECUTIVES Benjamin Golding, CEO from 01.05.2023 2 436 14 2 450 146 78 Lars Peder Fensli, CFO, interim CEO from 01.01.2023 until 30.04.2023 3 049 839 34 3 922 250 124 Morten Henriksen, Executive Vice President until 31.03.2023 1 008 566 7 1 581 47 52 Håkon Tanem, Executive Vice President from 09.10.2023, (vi) 578 2 000 13 2 591 16 30 Torkil Mogstad, Executive Vice President 2 126 423 32 2 581 250 93 Ingunn Ettestøl, ESG Director 1 798 326 23 2 147 188 144 Ann-Kari A. Heier, Executive Vice President from 14.11.2023 252 4 256 10 19 Total remuneration 11 247 4 154 127 15 528 907 540 2023 Salaries, fees Bonus paid out this year Beneﬁts in kind Total remu- neration Share-based payment Paid-in pension contribution Number of board meetings (i) BOARD MEMBERS Trond Westlie, Chairman, (iii) (v) 1 220 1 220 10 Morten Bergesen, Deputy Chairman, (ii), (iv) 458 458 10 Didrik Vigsnæs, Board Member, (iii) 386 386 10 Christian Must, Board member, (iii) 373 373 10 Stine Rolstad Brenna, Board Member, (ii) 443 443 10 Lise Lindback, Board Member, (iii) 376 376 10 Anne Grethe Dalane, Board member, (ii) 397 397 10 Total remuneration 3 653 3 653 INTRODUCTION ABOUT PERFORMANCE CORPORATE GOVERNANCE SUSTAINABILITY FINANCIAL SIGNATURES 153 (i) 17 Board meetings were held in 2024 and 10 in 2023. (ii) Member of Audit Commitee (iii) Member of Compensation Committee (iv) Member of Nomination Committee (v) Including consultancy fee of tNOK 500 in 2023, refer to note 24 (vi) Sign-on bonus of tNOK 2.000 in 2023 without binding period In addition, tNOK 62 (62) was paid in pensions to former board members. Senior executives participate in the collective pension scheme for employees of the parent company and subsidiaries. Refer to the description in the note on pensions. All companies in the Group have phased out deﬁned-beneﬁt pension schemes with effect from 31 December 2015. Bonuses, options and other beneﬁts are not pensionable. Senior executives of the Group received no remuneration or beneﬁts from other Group companies except as shown above. No additional remuneration was paid for special services beyond normal management duties.Regarding loans and security provided to members of the management team, the Board of Directors and other elected bodies of the company refer to Note 24. Employment terms for the CEO and other senior executives: The following severance pay has been agreed for the CEO in the event of the termination of his employment: Salary will be paid during the notice period (6 months). In addition he will receive a severance pay amounting to 6 months of salary. As part of the incentive program for senior executives in AFK, the CEO was given the right to buy 34 249 shares in the company in 2024 at a 20% discount with a lock-in period of three years. Senior executives Lars Peder Fensli and Håkon Tanem were given the right to buy 17 125 shares in 2024 on the same terms. Senior executives Ann-Kari Heier and Ingunn Ettestøl were given the right to buy respectively 2 280 and 5 000 shares in 2024 on the same terms. Executives may borrow up to two-thirds of the purchase price for the shares on the same terms as ordinary employee loans. Loans are secured by a mortgage on the shares and run as long as the employment relationship lasts. (1 000 NOK) Note 4.2 Pension liabilities Pension obligations / costs The Group's Norwegian companies are obligated to maintain an occupational pension scheme pursuant to the Mandatory Occupational Pension Scheme. The pension scheme satisﬁes statutory requirements. The pension scheme includes a retirement pension, disability pension and survivor pension. With effect no later than 31.12.2015, all the companies in the Group discontinued their deﬁned beneﬁt plan. Group Parent Company 2024 2023 2024 2023 PENSION LIABILITIES Present value of unfunded liabilities 18 275 17 508 5 658 5 804 Present value of funded liabilities 60 390 82 840 46 709 48 131 Fair value of pension assets -75 871 -96 027 -68 557 -61 500 Recognised employers’ contributions 1 618 1 536 798 818 Present value of net liabilities 4 412 5 856 -15 392 -6 747 Of which presented as pension assets 35 584 28 270 21 848 13 369 Other pension liabilities 3 329 2 811 Gross pension liabilities 43 325 36 938 6 456 6 623 CHANGE IN RECOGNISED NET LIABILITY FOR DEFINED-BENEFIT PENSIONS Net funded deﬁned-beneﬁt pension liability as at 1 January -4 236 -11 107 -13 369 -12 041 Liability for unfunded schemes as at 1 January 6 623 6 000 6 623 6 358 Paid-in contributions 1 273 -1 022 -1 475 Paid out from the scheme -1 012 -282 -255 -292 Actuarial (gains) losses from other comprehensive income -6 710 1 431 -8 168 718 Exchange rate changes, pension liabilities 502 805 Costs of deﬁned-beneﬁt schemes 241 483 -223 -14 Net liability for deﬁned-beneﬁt schemes as at 31 December -3 320 -3 691 -15 392 -6 747 154 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Group Parent Company 2024 2023 2024 2023 COSTS RECOGNISED IN THE INCOME STATEMENT Costs relating to this period’s pension entitlements 574 259 Interest on the liabilities 2 134 2 550 1 616 1 502 Expected return on pension plan assets -2 245 -2 916 -1 863 -1 721 Recognised employers’ contributions -222 590 24 205 Costs of deﬁned-contribution pension schemes 43 542 38 075 3 716 2 819 Net interest on pension liabilities transferred to ﬁnance 253 122 223 14 Transfer effect of discontinuation of separate line in income statement 1 454 1 943 1 454 1 943 Total pension costs 45 489 40 623 5 169 4 762 Actual return on pension plan assets 11 235 8 939 5 055 5 652 DEVELOPMENT OF THE GROUP’S FUNDED PENSION LIABILITIES Present value of funded liabilities 60 390 82 840 46 709 48 131 Fair value of pension assets -75 871 -96 027 -68 557 -61 500 Net result -15 481 -13 187 -21 848 -13 369 Note 4.3 Share-based payments Share option plan - Tekna Group "The guidelines for remuneration of leading persons in the Tekna group was approved by the shareholders at the annual general assembly dated 3 May 2023. The establishment of the share option plan was approved by the shareholders at the annual general assembly dated 15 May 2024. The board of directors of Tekna Holding ASA (the ""Company"") has resolved to implement an employee share option plan (the ""Plan""). The Plan is available to eligible individuals as determined by the board of directors. The Plan enables the eligible person to acquire a proprietary interest in the growth and eligible individuals as determined by the board of directors. The Plan enables the eligible person to acquire a proprietary interest in the growth and performance of the Company and to enhance the ability of the Company to attract, retain and reward qualiﬁed individuals. Options can be granted on an annual or ad hoc basis, with annual grants projected for 2024, 2025, and 2026, all subject to the board's discretion. Upon exercising their options, option holders can choose between acquiring shares after paying the strike price or opting for a cashless transaction. The latter involves the trans- fer of a number of treasury shares equivalent to the NOK amount of the number of exercised options, multiplied by the difference between the Company's shares' market price and the strike price.On 23 October 2024, the board of directors has granted a total of 2,124,000 options in the 2024 allocation round. These options have a strike price of NOK 4.88. Issued options vest 33% after one year, 33% after two years, and 33% after three years. The expiry date for any option granted is the date falling 24 months following the vesting date and will lapse if not exercised. The share options plan have been treated as an equity-settled plan under IFRS. The strike price of the share options will be based on the volume weighted average share price over the last ﬁve last trading days preceding the grant date. The total proﬁt each option holder may achieve shall be limited to 400% of the fair market value of the share at grant, or limited to 400% of annual ﬁxed salary of the option holder in the year of grant." Set out below are summaries of options granted under the plan: 2024 2023 Average exercise price per share option (NOK) Number of options Average exercise price per share option Number of options As at 1 January Granted during the year 0,62 2 124 000 Exercised during the year Forfeited during the year As at 31 December 0,62 2 124 000 Vested and exercisable at 31 December No options expired during the periods covered by the tables above. Share options outstanding at the end of the year have the following expiry dates and exercise prices: Grant date Expiry date Exercise price (NOK) Share options 31 December 2024 Share options 31 December 2023 23-Oct-24 23-Oct-27 0,62 708 000 23-Oct-24 23-Oct-28 0,62 708 000 23-Oct-24 23-Oct-29 0,62 708 000 Total 2 124 000 Weighted average remaining contractual life (years) of options outstanding at end of period 3,87 INTRODUCTION ABOUT PERFORMANCE CORPORATE GOVERNANCE SUSTAINABILITY FINANCIAL SIGNATURES 155 Fair value of options granted The assessed fair value at grant date of options granted during the year ended 31 December 2024 was NOK 1.2, 1.5 and 1.7 for the dif- ferent vesting periods. The fair value at grant date is independently determined using an adjusted form of the Black-Scholes model that considers the exercise price, the term of the option, the share price at grand date and expected price volatility of the the risk-free interest rate for the term of the option, and the volatilities of the peer group companies. underlying share, The model inputs for options granted during the year ended 31 December 2024 included: Vesting Year 2025 2026 2027 a) Options are granted for no consideration and vest after one, two and three years (service condition). Vested options are exerciseable for a period of 24 months years after vesting. b) Share price 4,6 4,6 4,6 c) Exercise price 4,88 4,88 4,88 d) Risk free-rate (3, 4 and 5 year) 3,53% 3,53% 3,53% e) Volatility 35% 38% 39% f) Maturity 3 4 5 g) Days (360 per year) 1 080 1 440 1 800 h) Date of exercise 23 Oct 27 23 Oct 28 23 Oct 29 i) Valuation date 23 Oct 24 23 Oct 24 23 Oct 24 The estimated expected price volatility is based on the median of volatilities of the peer group companies over an historical period of 3-5 years since Tekna has a short historical period only. The estimated expected lifetime of the options is set at 3,4 and 5 years. Total expenses arising from share options are recognized during the period as part of employee beneﬁt expenses and based on vesting of 84% regarding service condition, representing the actual churn, and adjusted for the proﬁt cap of 400% of the fair market value of the share at grant. Employee share scheme - Arendals Fossekompani ASA "In 2022, Arendals Fossekompani has established an incentive program for senior management and key employees which implies senior management is allowed to purchase shares in the Company each year up to a predetermined maximum amount. The shares are offered with 20% discount and three years lock-up period. In July 2024, senior management purchased 75,779 shares from the Company with 20% discount and a lock-up period of three years resulting in a share price of NOK 131,39. In September 2024, key employees purchased 5,800 shares from the Company with 20% discount and a lock-up period of three years resulting in a share price of NOK 131,10. The share price was calculated based on a 3-days weighted average stock market price before transaction date. Employee share scheme - Alytic Group "In 2021, Alytic AS has established an incentive program for senior management and key employees which implies senior man- agement is allowed to purchase a certain maximum number of shares in the Company each year. The shares are offered with 20% discount without any lock-up period. During 2024, senior management and key employees purchased 48,376 shares from the Company with 20% discount resulting in a share price of NOK 90,83. The price has been calculated based on equity investments in the Company resulting in an estimated stock market price of NOK 121,10. Employee share scheme - ENRX group In December 2021, ENRX group granted performance shares to key employees for the share price of NOK 47,68 per share (exercise price) with a lockup period of 3 years. The cost of the equity settled transactions is determined by the fair value at grant date using an appropriate valuation model in form of a Discounted Cash Flow (DCF) model with several underlying assumptions. The fair value of the shares granted is calculated at NOK 77,64 per share. The value between the exercise price of the performance shares and the calculated fair value of the performance shares is expensed over the vesting period equal to the lockup period. The lockup period started 1 January 2022. Expenses arising from share-based payment transactions Total expenses arising from share-based payment transactions recognized during the period as part of employee beneﬁt expense were as follows: (1 000 NOK) 2024 2023 Options issued under employee share option plan in Tekna 154 Shares purchased under employee share scheme in AFK 2 608 1 611 Shares purchased under employee share scheme in Alytic 1 464 150 Shares purchased under employee share scheme in ENRX 1 480 1 435 Total expenses 5 707 3 196 156 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Note 5 Property, plant & equipment (1 000 NOK) GROUP 2023 Hydro power plants Under construction Vehicles, machinery and eq. Buildings and land Right-of-use vehicles, machinery and eq. Right- of-use buildings and land Property, plant and equipment Balance at 1 January 2023 317 833 62 526 836 310 619 560 30 156 416 816 2 283 200 Additions 217 496 116 066 66 540 492 6 294 406 888 Aquisitions through business combinations 579 579 Disposal -9 320 -2 630 -1 673 -14 836 -28 460 Transferred from under construction -1 347 1 347 Reclassiﬁcation -10 517 -583 77 No longer in use 3 689 3 689 Change in RoU 11 320 71 744 83 064 Effect of movements in FX rates 1 513 39 257 9 678 1 484 11 812 63 744 Balance at 31 December 2023 317 833 280 178 988 443 692 565 41 856 491 829 2 812 704 DEPRECIATION AND IMPAIRMENT LOSSES Balance at 1 January 2023 -186 699 -597 181 -214 015 -20 400 -178 793 -1 197 088 Depreciation -6 131 -71 502 -22 713 -7 526 -71 355 -179 227 Reclassiﬁcation -97 131 -34 No longer in use -3 701 -3 701 Disposal 7 650 635 1 673 14 836 24 794 Change in RoU 2 105 9 520 11 625 Effect of movements in FX rates -29 762 -4 421 -1 046 -5 342 -40 570 Balance at 31 December 2023 -192 831 -694 594 -240 382 -25 227 -231 133 -1 384 168 Book value at 1 January 2023 131 134 62 526 239 129 405 545 9 756 238 023 1 086 112 Book value at 31 December 2023 125 003 280 178 293 849 452 182 16 628 260 696 1 428 536 2024 Hydro power plants Under construction Vehicles, machinery and eq. Buildings and land Right-of-use vehicles, machinery and eq. Right- of-use buildings and land Property, plant and equipment Balance at 1 January 2024 317 833 280 178 988 443 692 565 41 856 491 829 2 812 704 Additions 49 226 71 277 71 591 1 234 54 328 247 656 Disposal -24 381 -9 763 -504 -6 686 -41 333 Disposal of companies and busi- nesses -10 100 -179 593 -192 601 -3 461 -203 945 -589 700 Transferred from under construction -187 879 16 989 170 890 - Change in RoU 3 660 63 781 67 441 Effect of movements in FX rates 8 433 53 270 13 543 2 400 22 338 99 983 Balance at 31 December 2024 317 833 139 858 926 005 746 225 45 185 421 645 2 596 751 DEPRECIATION AND IMPAIRMENT LOSSES Balance at 1 January 2024 -192 831 -694 594 -240 382 -25 227 -231 133 -1 384 168 Depreciation -5 861 -71 757 -27 994 -8 487 -71 078 -185 176 Impairment -40 276 -192 008 -2 463 -105 -234 852 Disposal 19 567 -10 458 504 6 686 16 298 Disposal of companies and busi- nesses 157 956 191 862 4 813 109 394 464 024 Change in RoU 1 838 33 199 35 037 Effect of movements in FX rates -40 821 -5 375 -1 501 -11 302 -58 999 Balance at 31 December 2024 -198 692 -669 915 -284 355 -30 525 -164 339 -1 347 827 Book value at 1 January 2024 125 003 280 178 293 849 452 182 16 628 260 696 1 428 536 Book value at 31 December 2024 119 142 139 858 256 089 461 870 14 660 257 305 1 248 924 INTRODUCTION ABOUT PERFORMANCE CORPORATE GOVERNANCE SUSTAINABILITY FINANCIAL SIGNATURES 157 Provision of security As at 31 December 2024 operating assets in the subsidiaries with a book value of tNOK 456 353 (2023: tNOK 421 103) were pledged as security for bank loans (see Note 17). PARENT COMPANY 2023 Hydro power plants Under con- struction Vehicles, machinery and eq. Buildings and land Right-of-use vehicles, machinery and eq. Right- of-use buildings and land Property, plant and equipment Balance at 1 January 2023 317 833 1 180 39 028 4 756 504 70 999 434 300 Additions 11 290 11 290 Disposal -1 743 -1 743 Transferred from under construction -1 180 1 180 Change in RoU -5 973 -5 973 Balance at 31 December 2023 317 833 49 755 4 756 504 65 026 437 874 DEPRECIATION AND IMPAIRMENT LOSSES Balance at 1 January 2023 -186 699 -9 179 -182 -8 763 -204 823 Depreciation -6 131 -3 292 -126 -3 522 -13 072 Disposal 1 444 1 444 Change in RoU -28 6 001 5 973 Balance at 31 December 2023 -192 831 -11 027 -336 -6 284 -210 477 Book value at 1 January 2023 131 134 1 180 29 849 4 756 322 62 236 229 477 Book value at 31 December 2023 125 003 38 728 4 756 168 58 742 227 396 2024 Hydro power plants Under construction Vehicles, machinery and equip- ment Buildings and land Right-of-use vehicles, machinery and eq. Right- of-use buildings and land Property, plant and equipment Balance at 1 January 2024 317 833 49 755 4 756 504 65 026 437 874 Additions 5 560 1 057 6 617 Disposal -285 -504 -789 Transferred from under construction Change in RoU 2 254 2 254 Balance at 31 December 2024 317 833 5 560 50 528 4 756 67 279 445 956 DEPRECIATION AND IMPAIRMENT LOSSES Balance at 1 January 2024 -192 831 -11 027 -336 -6 284 -210 477 Depreciation -5 861 -3 518 -168 -3 488 -13 035 Disposal 45 504 549 Change in RoU Balance at 31 December 2024 -198 692 -14 500 -9 772 -222 964 Book value at 1 January 2024 125 003 38 728 4 756 168 58 742 227 396 Book value at 31 December 2024 119 142 5 560 36 027 4 756 57 507 222 992 158 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE CORPORATE GOVERNANCE SUSTAINABILITY FINANCIAL SIGNATURES 159 Note 6 Intangible assets (1 000 NOK) GROUP 2023 Goodwill Other intangible assets Concessions Capitalised development cost Intangible assets under development Intangible assets and goodwill Balance at 1 January 2023 1 075 438 511 310 12 250 546 165 31 666 2 176 829 Additions 4 677 242 614 936 248 228 Aquisitions through business combinations 259 967 177 825 17 797 343 455 932 Reclassiﬁcation of accumulated depreciations PPE disposal -9 214 -9 214 Effect of movements in exchange rates 49 345 20 956 990 124 71 414 Balance at 31 December 2023 1 384 750 714 768 12 250 798 351 33 070 2 943 189 AMORTIZATION AND IMPAIRMENT LOSSES Balance at 1 January 2023 -43 131 -205 609 -7 559 -163 748 -420 047 Amortization -56 950 -245 -83 491 -140 687 Reclassiﬁcation of accumulated depreciations PPE disposal 9 214 9 214 Effect of movements in exchange rates -2 018 -12 489 -604 -15 111 Balance at 31 December 2023 -45 149 -275 048 -7 804 -238 628 -566 630 Book value at 1 January 2023 1 032 307 305 701 4 691 382 417 31 666 1 756 782 Book value at 31 December 2023 1 339 601 439 720 4 446 559 723 33 070 2 376 559 2024 Goodwill Other intangible assets Concessions Capitalised development cost Intangible assets under development Intangible assets and goodwill Balance at 31 December 2024 1 384 750 714 768 12 250 798 351 33 070 2 943 189 Additions 22 554 254 754 7 622 284 930 Disposal of companies and businesses -534 600 -369 377 -823 576 -6 717 -1 734 270 Effect of movements in exchange rates 70 885 32 135 7 365 405 110 792 Balance at 31 December 2024 921 035 400 081 12 250 236 895 34 380 1 604 640 AMORTIZATION AND IMPAIRMENT LOSSES Balance at 1 January 2024 -45 149 -275 048 -7 804 -238 628 -566 630 Amortization 207 -49 760 -245 -104 773 -154 571 Impairment -13 781 -115 798 -129 579 Disposal of companies and businesses -220 859 189 127 306 620 274 888 Effect of movements in exchange rates 758 -19 964 -2 968 -22 173 Balance at 31 December 2024 -278 823 -271 444 -8 049 -39 749 -598 065 Book value at 1 January 2024 1 339 601 439 720 4 446 559 723 33 070 2 376 559 Book value at 31 December 2024 642 211 128 637 4 201 197 146 34 380 1 006 576 PARENT COMPANY 2023 Goodwill Other intangible assets Concessions Capitalised development cost Intangible assets under development Intangible assets and goodwill Balance at 1 January 2023 8 530 12 250 20 780 Additions No longer in use Balance at 31 December 2023 8 530 12 250 20 780 AMORTIZATION AND IMPAIRMENT LOSSES Balance at 1 January 2023 -4 490 -7 559 -12 049 Amortization -1 689 -245 -1 934 No longer in use Balance at 31 December 2023 -6 179 -7 804 -13 983 Book value at 1 January 2023 4 040 4 691 8 731 Book value at 31 December 2023 2 351 4 446 6 797 2024 Goodwill Other intangible assets Concessions Capitalised development cost Intangible assets under development Intangible assets and goodwill Balance at 1 January 2024 8 530 12 250 20 780 Additions No longer in use Balance at 31 December 2024 8 530 12 250 20 780 AMORTIZATION AND IMPAIRMENT LOSSES Balance at 1 January 2024 -6 179 -7 804 -13 983 Amortization -1 255 -245 -1 500 No longer in use Balance at 31 December 2024 -7 434 -8 049 -15 483 Book value at 1 January 2024 2 351 4 446 6 797 Book value at 31 December 2024 1 097 4 201 5 298 160 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Note 6 Intangible assets (1 000 NOK) A breakdown of the allocation of intangible assets between the companies is provided below. Other intangible assets Goodwill Concessions Capitalised develop- ment cost Intangible assets under development Total INTANGIBLE ASSETS BY COMPANY Arendals Fossekompani 1 097 4 201 5 298 ENRX 81 361 372 239 95 746 549 345 NSSLGlobal 189 005 189 005 Tekna 37 156 5 162 12 617 54 935 Alytic 9 024 33 653 87 709 21 763 152 149 Ampwell 46 577 8 619 55 196 AFK Property 738 738 Total intangible assets 128 637 642 211 4 201 197 236 34 380 1 006 666 Other intangible assets consist mainly of technology, patents and trademarks, customer relationships and customer contracts. Capitalised development cost consist mainly of software development and platform development. Concession rights in the parent company are amortised over the term of the concession (50 years). Other intangible assets are amortised over periods of 4 to 10 years. Goodwill is tested annually for impairment (see accounting policies and Note 21). Goodwill is allocated to and tested for impairment for the operating segments, which is the level goodwill is monitored by group management. The recoverable amount of goodwill is estimated based on value in use for the segments ENRX, NSSLGlobal and Alytic. For the segment Tekna, fair value less cost to sell is used to calculate the recoverable amount of goodwill. The impairment testing for 2024 did not result in any impairments. Estimated value in use is based on discounted future cash ﬂows. These measure the cash ﬂows based on market requirements of return and risk. Value in use for 2024 has been calculated in the same way as in 2023. Budgets have been applied for 2025 and long-term forecasts from strategy plans for the period up to 2029. In addition, a convergence period of 5 years is applied to bridge 2029 ﬁnancials to a terminal period with an applied growth rate of 2.0% after the 5+5 year forecasting period. The risk-free interest rate has been assessed separately for each company depending on currency of cash ﬂows. Risk premiums between 4.1% and 4.9% were used in the calculations, depending on relevant markets, the nature of the business, maturity and uncertainty in forecasting. Moreover, scenario weighting and peer multiple analyses are used for sensitivity purposes. Special circumstances relating to the individual calculations are commented on below. ENRX The Required Rate of Return (WACC before tax) has been set to 11.3%. Revenue growth is based 2025 budget and board approved strategy forecast until 2029, outlining expected growth for the Heat products and services and further commercial development of the Charge product and services. Revenue growth in the terminal period is set at 2.0%, according to an assumed inﬂation target. A sensitivity analysis based on a unilateral change in estimated future EBITDA shows that a reduction of more than 19% may lead to impairment. Equivalently, a 5.0 percentage point change in WACC may cause impairment. NSSLGlobal The Required Rate of Return (WACC before tax) has been set to 11.3%. Both revenue growth and EBITDA development in the forecast period are assumed moderate, with limited revenue growth and lower EBITDA margins compared to the last three-year average. Revenue growth in the terminal period is set at 2.0%, according to an assumed inﬂation target. A sensitivity analysis based on a unilateral change in estimated future EBITDA shows that a reduction of more than 78% may lead to impairment. Tekna Tekna is listed on Oslo Stock Exchange, and the market capitalization of the company is considered as a best-estimate for fair value less cost to sell, and as such, the recoverable amount. The market value as per 31.12.2024 was MNOK 414, while the booked equity of the company in the group accounts as per 31.12.2024 was MNOK 322. The market value can decrease by approximately 25% before an impairment may be needed. Alytic The Required Rate of Return (WACC before tax) has been set to 12.5%. Revenue growth is based on board approved strategy fore- casts from the existing Alytic portfolio. The Alytic group of companies has over the last couple of years been in a build-up and com- mercialization phase, and expects signiﬁcant growth in revenue and positive margins during the forecast period. Revenue growth in the terminal period is set at 2.0%, according to an assumed inﬂation target. A sensitivity analysis based on a unilateral change in estimated future EBITDA shows that a reduction of more than 20% may lead to impairment. Ampwell (Commeo) As a result of poor ﬁnancial performance, and subsequent ﬁling for insolvency of Commeo, a German group company owned by Ampwell (100% owned by Arendals Fossekompani), the entire goodwill of EUR 24.2 million (NOK 281 million) related to the acquisi- tion of Commeo was impaired in the consolidated group accounts in the second quarter of 2024. Capitalized R&D in Commeo was impaired with EUR 8.3 million (NOK 96 million) INTRODUCTION ABOUT PERFORMANCE CORPORATE GOVERNANCE SUSTAINABILITY FINANCIAL SIGNATURES 161 Research and development cost In 2024 development costs of tNOK 86 916 were capitalized (2023 tNOK 76 813. Other research and development costs in the Group are expensed as they arise and amounted to tNOK 139 408 in 2024 and tNOK 80 133 in 2023. Note 7 Other operating costs (1 000 NOK) Group Parent Company 2024 2023 2024 2023 OTHER OPERATING COST Contractors 10 549 11 728 Maintenance property, plant and equipment 61 285 43 930 36 561 22 018 Loss sales of PPE 89 2 194 Loss sales of other non-current assets 213 Premises, service and ofﬁce costs 50 214 63 246 1 400 2 716 Audit and other fees 73 092 80 088 15 271 24 785 Consession fees 3 365 3 502 3 365 3 291 Company cars, lifts and trucks 10 747 9 492 462 425 Communication costs 4 400 4 043 Travelling costs, indirect 32 230 28 161 2 882 1 904 Sales and marketing costs 48 632 48 690 4 080 3 007 Manufacturing indirect costs 32 089 21 897 126 117 Other operating costs (Misc.) 84 059 57 506 11 054 11 041 Insurances 16 392 12 791 3 411 2 939 ICT costs 66 593 51 518 11 140 9 250 Property tax 16 494 15 314 9 327 9 544 R&D costs 12 129 1 464 Loss allowance 2 070 34 672 Operating costs, IC 4 425 1 052 Restructuring 18 033 Operating costs Other direct costs 69 546 63 385 Other operating expenses 593 974 571 870 103 503 92 090 REMUNERATION TO AUDITOR Statutory audit 16 730 20 323 3 731 3 192 Other assurance services 4 004 1 981 2 562 107 Tax advice 1 616 1 631 470 24 Other non-audit services 1 071 8 344 109 2 171 Total remuneration to auditor 23 421 32 278 6 872 5 495 162 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Note 8 Finance income and ﬁnance costs (1 000 NOK) Group Parent Company 2024 2023 2024 2023 FINANCE INCOME Interest income, intercompany 73 096 65 999 Interest income 94 527 66 158 42 334 47 287 Currency exchange income 19 226 56 279 13 196 50 849 Other ﬁnance income 1 328 25 156 7 13 Gain on partial sale of subsidiaries 607 3 883 Gain on total sale of subsidiaries -12 3 265 046 Dividend income 383 3 234 361 3 234 Dividend income, intercompany 107 314 96 393 Finance income 115 452 150 828 3 501 961 267 658 FINANCE COST Interest expense 106 211 67 739 70 449 47 097 Interest expense cashpool 37 753 9 177 Interest expense on lease 9 959 6 117 3 072 3 060 Currency exchange expense 2 042 14 566 328 476 Other ﬁnance cost * 56 879 35 882 34 606 34 016 Impairment loss on subsidiaries 150 Loss on partial sale of subsidiary 1 467 Loss on total sale of subsidiary 27 141 Impairment loss IC receivables 965 788 Impairment loss ﬁnancial assets 49 367 11 425 Impairment loss on associates 7 638 7 638 Translation differences -14 119 -16 778 Finance costs 248 090 124 340 1 114 276 92 438 Net ﬁnancial items -132 639 26 488 2 387 685 175 220 * Include fair value adjustments of investments Note 9.1 Tax expense (1 000 NOK) Ordinary income tax in Norway: Ordinary income tax on general income. The tax rate was 22% in 2023 and 2024. The 22% tax rate was used to calculate deferred tax assets and deferred tax liabilities as at 31 December 2024. Special tax rules for Norwegian energy companies comprise the following elements: Natural resource tax of 1.3 øre per kWh of the company’s average annual production in the past 7 years. Estimated natural resource tax is deducted from the company’s tax payable on general income. Natural resource tax still has to be paid in years when no tax is calculated as being payable. The amount is recognised as a receivable and is offset against tax payable on general income in subse- quent years. Natural resource tax accrues to the municipalities and counties in the concession area. Resource rent tax is taxation of income from use of natural resources like hydropower. The resource rent tax for hydropower is determined for each individual power station and accrues to the state. This tax is based on gross resource rent income less operating costs and tax-free allowances. Resource rent income is based on market prices and therefore differs slightly from the company’s recognised sales ﬁgures. Effective resource rent tax on hydropower has been increased from 37% to 45% with effect from the 2022 ﬁscal year. Small hydropower stations do not pay resource rent tax. Corporate tax is calculated before resource rent tax on hydro- power. An effective resource rent tax rate of 45% therefore means that the formal resource rent tax is set at 57.7 %. The total marginal tax (resource rent tax and corporate tax) will then be 67% for hydropower. In addition, in 2023 high-price contribution was set at 23% of power revenues that exceed NOK 0.70 per kWh. This means that total marginal tax will be 90% for hydropower exceeding NOK 0.70 per kWh. High-price contribution tax was removed from October 2023. INTRODUCTION ABOUT PERFORMANCE CORPORATE GOVERNANCE SUSTAINABILITY FINANCIAL SIGNATURES 163 Group Parent Company 2024 2023 2024 2023 CURRENT TAX EXPENSE Natural resource tax for the year 6 370 6 370 Tax payable on general income less natural resource tax 178 127 237 057 38 221 91 630 High-price tax contribution 26 083 26 083 Adjustment for previous years -409 -18 953 -317 -486 Adjustment for disposals -11 494 -26 076 Resource rent tax payable for the year 99 407 174 000 99 407 174 000 Total current tax 265 631 398 481 137 311 297 596 DEFERRED TAX EXPENSE Effect of change in temporary differences 4 015 -4 676 986 545 Effect of changed tax rate 8 -10 Effect of change in temporary differences, resource rent tax 677 677 Effect of changed tax rate, resource rent tax Total deferred tax expense 4 023 -4 010 986 1 222 Total tax expense in the income statement 269 654 394 471 138 297 298 818 RECONCILIATION OF EFFECTIVE TAX RATE Total pre tax income 3 257 718 455 780 2 561 645 509 931 Adjustment for disposals -46 896 -257 597 Tax based on current ordinary tax rate 494 093 359 302 563 562 112 185 High-price tax contribution (until 30.09.2023) 26 083 26 083 Resource rent tax for the year 99 406 174 673 99 407 174 677 Effect of different tax rates abroad 14 651 -2 676 Calculated tax 561 253 299 785 662 969 312 944 Effect of non-deductible expenses 356 403 32 300 217 862 9 133 Effect of non-taxable income -664 411 341 963 -742 216 -22 772 Effect of unrecognised tax loss carryforward 16 418 -293 284 Effect of changed tax rates -96 70 Effect of changed tax assessments for previous years -5 474 19 065 Over-/underprovision relating to previous years 5 562 -5 429 -317 -486 Tax expense in reconciliation of effective tax rate 269 654 394 471 138 297 298 818 Current ordinary tax rate in Norway 22,0 % 22,0 % 22,0 % 22,0 % Effective tax rate 9,7 % 103,1 % 5,4 % 58,6 % TAX RECOGNISED IN OTHER COMPREHENSIVE INCOME (OCI) Tax on cash ﬂow hedges that may be reclassiﬁed to P&L -207 -1 218 Tax on OCI that will not be reclassiﬁed to P&L -1 797 -143 -1 797 158 Total tax recognised in OCI -2 004 -1 361 -1 797 158 Tax payable Tax payable of tNOK 209 348 (2023: tNOK 369 671 ) for the Group and tNOK 137 628 (2023: tNOK 272 000) for the parent company consists of unassessed tax payable for the current period. 164 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Note 9.1 Tax expense cont. (1 000 NOK) GROUP Assets Liabilities Net 2024 2023 2024 2023 2024 2023 Property, plant and equipment 21 619 23 711 -43 952 -43 712 -22 333 -20 000 Goodwill, intangible assets 944 7 509 -21 200 -98 540 -20 256 -91 031 Non-current receivables and liabilities in foreign currency 3 054 3 838 -13 008 -11 737 -9 954 -7 900 Construction contracts -6 780 -6 535 -6 780 -6 535 Inventories 10 941 8 883 -608 -693 10 333 8 190 Trade and other receivables 2 960 1 449 2 960 1 449 Leases 30 252 19 123 -1 490 -1 508 28 763 17 615 Untaxed gains and losses 356 445 -6 -4 075 350 -3 630 Provisions 19 717 17 421 -56 -691 19 661 16 730 Other assets -45 3 537 -316 -2 759 -361 778 Financial instruments 598 805 -150 -149 448 656 Employee beneﬁts 553 2 408 -4 306 -4 346 -3 753 -1 937 Tax loss carryforward 307 644 341 560 896 308 540 341 560 Unrecognised tax loss carryforward -273 747 -293 284 -3 118 -276 866 -293 284 Total deferred ordinary income tax 124 848 137 407 -94 095 -174 746 30 753 -37 339 PPE, resource rent tax 31 358 32 123 31 358 32 123 Losses carried forward - Resource rent Total deferred resource rent tax 31 358 32 123 31 358 32 123 Deferred tax asset/liability 156 206 169 530 -94 095 -174 746 62 112 -5 216 Offsetting of assets and liabilities -48 979 -41 807 48 979 41 807 Net deferred tax asset/liability 107 228 127 723 -45 116 -132 939 62 112 -5 216 Recognised tax loss carryforward 33 897 48 277 -2 222 31 675 48 277 PARENT COMPANY Assets Liabilities Net 2024 2023 2024 2023 2024 2023 Property, plant and equipment 14 927 15 295 14 927 15 295 Leases 559 297 559 297 Gains and losses account 43 54 43 54 Financial instruments Employee beneﬁts -3 386 -1 484 -3 386 -1 484 Tax loss carryforward Recognised tax loss carryforward Total deferred ordinary income tax 15 529 15 646 -3 386 -1 484 12 143 14 162 PPE, resource rent tax 31 358 32 123 31 358 32 123 Losses carried forward - Resource rent Total deferred resource rent tax 31 358 32 123 31 358 32 123 Deferred tax asset/liability 46 888 47 769 -3 386 -1 484 43 501 46 285 Offsetting of assets and liabilities -3 386 -1 484 3 386 1 484 Net deferred tax asset/liability 43 501 46 285 43 501 46 285 INTRODUCTION ABOUT PERFORMANCE CORPORATE GOVERNANCE SUSTAINABILITY FINANCIAL SIGNATURES 165 Note 9.2 Recognised tax loss carryforward per country Group 2024 2023 Norway 18 837 44 158 Germany 8 640 France 3 988 3 801 Spain 8 Other 209 309 Total 31 675 48 277 Note 9.3 Change in deferred tax over the year (1 000 NOK) GROUP 2023 Total Opening Balance Changes in Net Income Reclassi- ﬁcation From OCI Change in tax loss carry- forward Mergers and acqui- sitions Group Contri- bution N-GAAP Group Contri- bution Received/ Paid Total Effect from FX Closing Balance ORDINARY INCOME TAX Property, plant and equipment -11 223 -14 857 -784 6 079 -20 000 Goodwill, intangible assets -34 750 2 302 1 889 -51 084 -7 499 -91 031 Non-current rec. and liab. in for. currency 1 620 -9 845 -300 343 -7 900 Construction contracts -3 495 -3 049 -9 9 -6 535 Inventories 12 067 -4 499 -622 622 8 190 Trade and other receivables 1 150 306 1 -6 1 449 Leases 17 041 455 -538 -36 155 17 615 Untaxed gains and losses 547 -4 178 -359 - -3 630 Provisions 10 632 6 471 -373 16 730 Other items -4 789 5 359 322 208 778 Financial instruments 1 878 -4 -1 218 656 Employee beneﬁts -3 111 1 402 121 -143 -103 -1 937 Tax loss carryforward 23 038 24 825 -1 009 -573 987 48 277 Total ordinary income tax 10 606 4 686 -1 288 -1 361 -36 -51 084 -573 424 -37 339 Property, plant and equipment 32 800 -677 32 123 Loss carried forward - Resource rent Total resource rent tax 32 800 -677 32 123 Total change in deferred tax 43 405 4 010 -1 361 -36 -51 084 -573 424 -5 216 GROUP 2024 Total Opening Balance Changes in Net Income Reclassi- ﬁcation From OCI Change in tax loss carry- forward Mergers and acqui- sitions Group Contri- bution N-GAAP Group Contri- bution Received/ Paid Total Effect from FX Closing Balance Ordinary income tax Property, plant and equipment -20 000 -11 484 6 926 1 873 -22 333 Goodwill, intangible assets -91 031 -3 293 75 988 1 844 -20 256 Non-current rec. and liab. in for. currency -7 900 -1 807 -247 -9 954 Construction contracts -6 535 -3 536 3 416 -62 -6 780 Inventories 8 190 1 624 -875 697 10 333 Trade and other receivables 1 449 3 -481 85 1 141 Leases 17 615 16 037 -4 150 732 30 583 Gains and losses account -3 630 -88 4 068 350 Provisions 16 730 416 -4 943 4 254 18 011 Other items 778 731 120 -434 1 289 Financial instruments 656 -2 848 -207 2 847 448 Employee beneﬁts -1 937 -773 745 -1 797 5 -3 753 Tax loss carryforward 48 277 1 759 -19 155 -23 -884 862 31 675 Total ordinary income tax -37 339 -3 258 61 658 -2 004 -23 1 963 9 608 30 753 Property, plant and equipment 32 123 -765 31 358 Loss carried forward - Resource rent Total resource rent tax 32 123 -765 31 358 Total change in deferred tax -5 216 -4 023 -14 316 -2 004 -23 1 963 9 608 62 112 PARENT COMPANY 2023 Total Opening Balance Changes in Net Income Reclassi- ﬁcation From OCI Change in tax loss carry- forward Mergers and acqui- sitions Group Contri- bution N-GAAP Group Contri- bution Received/ Paid Total Effect from FX Closing Balance Ordinary income tax Property, plant and equipment 15 732 -436 15 295 Leases 297 297 Gains and losses account 68 -14 54 Financial instruments Employee beneﬁts -1 250 -392 158 -1 484 Tax loss car- ryforward Total ordinary income tax 14 549 -545 158 14 162 Property, plant and equipment 32 800 -677 32 123 Loss carried forward - Resource rent Total resource rent tax 32 800 -677 32 123 Total change in deferred tax 47 349 -1 222 158 46 285 PARENT COMPANY 2024 Ordinary income tax Property, plant and equipment 15 295 -368 14 927 Leases 297 263 559 Gains and losses account 54 -11 43 Financial instruments Employee beneﬁts -1 484 -105 -1 797 -3 386 Tax loss carryforward Total ordinary income tax 14 162 -222 -1 797 12 143 Property, plant and equipment 32 123 -765 31 358 Loss carried forward - Resource rent Total resource rent tax 32 123 -765 31 358 Total change in deferred tax 46 285 -986 -1 797 43 501 166 167 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE 168 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Note 10 EQUITY Share capital Ordinary shares 2024 2023 Issued as at 31 December – fully paid 55 995 250 55 995 250 Owners of shares are entitled to the dividend approved in each individual case by the annual general meeting, and are entitled to one vote per share at the company’s annual general meeting. No shareholder may personally or by proxy vote for more than a quarter of the total number of shares. Shares transferred to a new owner do not confer voting rights until at least three weeks have passed since the acquisition was notiﬁed to the company. The rights to the company’s treasury shares (see Note 22) are suspended until the shares have been acquired by others. Dividend The Company pay dividend quarterly. The following cash dividend has been paid; In February (for Q4), tNOK 54 857 (tNOK 52 067), in May tNOK 54 857 (tNOK 54 807) in September tNOK 54 857 (tNOK 54 836) and in November tNOK 54 939 (tNOK 54 823). No dividend is paid on treasury shares. Ordinary dividend Approved 2024 and paid in 2024 Approved 2023 and paid in 2023 Paid 219 511 216 532 Total 219 511 216 532 Note 11.1 Group companies (1 000 NOK) Subsidiaries Domicile Shareholding Non-controlling interests' share of equity, by subgroup Value in parent company balance sheet 2024 2023 2024 2023 2024 2023 Volue ASA () Oslo 60,0 % 342 715 304 295 NSSL Global Ltd UK 80,0 % 80,0 % 142 426 127 552 273 298 273 298 ENRX AS Skien 95,1 % 94,0 % 24 785 20 522 453 785 451 532 Alytic AS Arendal 96,0 % 95,0 % 31 799 41 240 280 048 140 219 Tekna Holding ASA Arendal 69,5 % 70,3 % 63 867 81 035 322 920 318 500 AFK Property AS Arendal 100,0 % 100,0 % 7 140 6 634 227 692 227 692 Vergia AS Arendal 100,0 % 31 343 Ampwell AS Arendal 100,0 % 100,0 % 17 883 100 100 AFK Tyskland Holding AS Arendal 100,0 % 100,0 % 100 100 270 016 637 581 1 557 944 1 747 080 () In October 2024, Arendals Fossekompani, Advent International and Generation Management completed the acquisition and delisting of Volue. Arendals Fossekompani reduced its shareholding in Volue from 60% to 40%. INTRODUCTION ABOUT PERFORMANCE CORPORATE GOVERNANCE SUSTAINABILITY FINANCIAL SIGNATURES 169 Note 11.2 Subsidiaries Subsidiaries Shareholding 2024 2023 Subsidiaries in NSSLGlobal Ltd. London UK NSSLGlobal LLC California USA 100,0 % 100,0 % NSSLGlobal PTE Ltd Singapore Singapore 100,0 % 100,0 % Nera Satellite Services LTD London UK 100,0 % 100,0 % NSSL Ltd London UK 100,0 % 100,0 % Aero-Satcom Ltd. London UK 50,0 % 50,0 % NSSLGlobal AB Hönö Sweden 100,0 % 100,0 % NSSLGlobal AS Oslo Norway 100,0 % 100,0 % NSSLGlobal Continental Europe APS Brøndby Denmark 100,0 % 100,0 % NSSLGlobal APS Brøndby Denmark 100,0 % 100,0 % NSSLGlobal Polska SP. Z.o.o. Warzsawa Poland 100,0 % 100,0 % NSSLGlobal Israel Ltd Beit Shemesh Israel 100,0 % 100,0 % NSSLGlobal Kabushiki Kaisha Tokyo Japan 100,0 % 100,0 % NSSL Global BV Scheemda Netherlands 100,0 % 100,0 % NSSLGlobal GmbH Barbüttel Germany 100,0 % 100,0 % SUBSIDIARIES IN ENRX GROUP ASA Induction Holding AS Skien Norway 100,0 % 100,0 % ENRX IPT GmbH Efringer-Kirchen Germany 100,0 % 100,0 % ENRX Holding AS Skien Norway 100,0 % 100,0 % ENRX AS Skien Norway 100,0 % 100,0 % ENRX AS ﬁlial Västerås Sweden 100,0 % 100,0 % ENRX GmbH Freiburg Germany 100,0 % 100,0 % EFD France Holding s.a.r.l. Grenoble France 100,0 % 100,0 % ENRX S.A.S. Grenoble France 100,0 % 100,0 % ENRX Ltd. Wolverhampton UK 100,0 % 100,0 % ENRX Corporation Detroit USA 100,0 % 100,0 % EHE Acquisition Corporation Inc Seattle USA 100,0 % 100,0 % ENRX s.r.l Milano Italy 100,0 % 100,0 % ENRX Private Ltd. Bangalore India 100,0 % 100,0 % ENRX (Shanghai) Co., Ltd. Shanghai China 100,0 % 100,0 % ENRX (Zhuhai) Co., Ltd. Zhuhai City China 100,0 % ENRX Ges.m.b.H Vienna Austria 100,0 % 100,0 % ENRX s.l Bilbao Spain 100,0 % 100,0 % ENRX SRL Bucuresti Romania 100,0 % 100,0 % ENRX SP. Z o.o Gliwice Poland 100,0 % 100,0 % ENRX Ltd. Bangkok Thailand 100,0 % 100,0 % ENRX K.K. Yokohama Japan 100,0 % 100,0 % ENRX Brasil Ltd Sao Paolo Brazil 100,0 % 100,0 % ENRX Sdn. Bhd. Selangor Malaysia 100,0 % 100,0 % EFD Induction S de R.L Queretaro Mexico 100,0 % 100,0 % SUBSIDIARIES IN TEKNA HOLDING ASA Tekna Holdings Canada Inc. Sherbrooke Canada 100,0 % 96,4 % Tekna Plasma Systems Inc. Sherbrooke Canada 100,0 % 100,0 % Tekna Advanced Materials Inc. Sherbrooke Canada 100,0 % 100,0 % Tekna Plasma Europe S.A.S. Mâcon France 100,0 % 100,0 % Tekna Plasma Systems(Suzhou)Co Ltd. Suzhou China 100,0 % 100,0 % Tekna Plasma India Private Ltd. Chennai India 100,0 % 100,0 % Tekna Plasma Korea Co, Ltd Incheon South Korea 100,0 % 100,0 % Tekna Inc Delawere USA 100,0 % 100,0 % 170 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Shareholding 2024 2023 SUBSIDIARIES IN ALYTIC AS Kontali Holding AS Arendal Norway 100,0 % 100,0 % Kontali Analyse AS Kristiansund Norway 84,5 % 75,1 % Seafood TIP Utrecht Netherlands 84,5 % 100,0 % Utel Holding AS Arendal Norway 100,0 % 100,0 % Utel Systems AS Grimstad Norway 89,3 % 94,2 % Veyt Holding AS Arendal Norway 100,0 % 100,0 % Veyt AS Oslo Norway 61,8 % 61,6 % Greenfact GmbH Berlin Germany 100,0 % 100,0 % Greenfact Ltd London UK 100,0 % 100,0 % Factlines Holding AS Oslo Norway 100,0 % 100,0 % Factlines AS Oslo Norway 68,8 % 66,7 % Alytic Blue AS Oslo Norway 100,0 % 100,0 % SUBSIDIARIES IN AFK PROPERTY AS Vindholmen Eiendom AS Arendal Norway 100,0 % 100,0 % Bedriftsveien 17 AS Arendal Norway 100,0 % 100,0 % Bøleveien 4 AS Skien Norway 100,0 % 100,0 % Steinodden Eiendom AS Arendal Norway 77,6 % 77,6 % Arendal Lufthavn Gullknapp AS Arendal Norway 92,3 % 92,3 % Gullknapp Invest AS Arendal Norway 100,0 % 100,0 % Longum Property AS Arendal Norway 100,0 % 100,0 % AFK Longum Invest AS Arendal Norway 100,0 % 100,0 % Bryggebyen Folkebad AS Arendal Norway 100,0 % 100,0 % Folkebad Drift AS Arendal Norway 100,0 % 100,0 % Bøylestad Energipark AS Froland Norway 100,0 % 100,0 % Vergia Property AS Arendal Norway 100,0 % 100,0 % SUBSIDIARIES IN AMPWELL AS AFK Storage 3 AS Arendal Norway 100,0 % 100,0 % Cellect Holding AS Arendal Norway 100,0 % 100,0 % Cellect Energy SL Barcelona Spain 77,2 % 61,0 % Commeo Holding AS Arendal Norway 100,0 % 100,0 % Ampwell GmbH Berlin Germany 100,0 % 100,0 % SUBSIDIARIES IN AFK TYSKLAND HOLDING AS Arendals Fossekompani Deutchland GmbH Berlin Germany 100,0 % 100,0 % Note 11.3 Investments in associates and joint ventures (1 000 NOK) The Group has the following investments in associates and joint ventures. All businesses are organized as companies with limited liability corresponding to Norwegian corporations. Guidelines for the operation of companies are based on shareholder agreements. According to the shareholder agreements of joint operations it is required unanimity between the parties for making decisions about relevant activities. Accordingly, participants in the companies have joint control over the activities. During 2024 the Group has sold the shares in Vergia group including the related positions in Seagust AS, Hydepoint AS and North Ammonia AS. In October 2024, Arendals Fossekompani, Advent International and Generation Management completed the acquisition and delisting of Volue. Arendals Fossekompani reduced its shareholding in Volue from 60% to 40% through the new established associated company Faraday Topco AS. Acquisition cost of shares in Faraday Topco AS er NOK 2,571 million. There are two share classes in Faraday Topco AS: preference shares and ordinary shares. Arendals Fossekompani owns 40% of both share classes. Faraday Topco AS owns indirectly 100% of shares in Volue AS. From 2025, there has been established a new share-based payment arrangement for key employees in Volue. In the consolidated group accounts the investments in joint ventures and associates are accounted for in accordance with the equity method. In the company accounts the investments in joint ventures and associates are accounted for based on historic cost. INTRODUCTION ABOUT PERFORMANCE CORPORATE GOVERNANCE SUSTAINABILITY FINANCIAL SIGNATURES 171 Entity Country Ownership interest Imphytec Powders SAS France Production of powders 48,00% Kilandsfoss AS Norway 33,33% Glomsdam Krafverk AS Norway 50,00% Faraday Topco AS Norway Digital energy solutions 40,00% Aero-Satcom Ltd UK Telecom 50,00% Based on an overall assessment where the size and complexity is taken into consideration these investments are considered to be signiﬁcant joint ventures. Further information regarding these companies is disclosed below. NorSun AS North Ammonia AS Sea- gust AS Hyde- point AS Cellect Energy S.L. Kilands- foss AS Glomsdam Krafverk AS Aero- Satcom Ltd Imphytec Powders SAS Faraday Topco AS Total Balance at 1 January 2023 16 906 1 647 13 388 -342 1 399 43 57 4 219 37 317 Income from associates -9 577 -2 679 -11 230 -2 619 -996 -26 -457 958 -4 755 -31 382 Aquisitions through business combinations -362 6 151 5 789 Investment/ disposal of companies and businesses -8 934 28 -8 906 Issue of shares from non-con- trolling interests 1 605 5 075 10 099 250 17 029 Exchange differ- ences on trans- lation of foreign operations -68 537 469 Balance at 31 December 4 043 2 158 -2 961 10 116 -150 7 109 20 315 Balance at 1 January 2024 4 043 2 158 -2 961 10 116 -150 7 109 20 315 Income from associates 1 891 -103 976 -36 585 -33 821 Aquisitions through business combinations 2 570 648 2 570 648 Other compre- hensive income -1 488 -1 488 Investment/ disposal of companies and businesses -4 043 -2 158 2 961 -3 240 Issue of shares from non-con- trolling interests Exchange differ- ences on trans- lation of foreign operations 734 734 Balance at 31 December 12 007 -253 8 819 2 532 576 2 553 149 * Faraday Topco AS owns indirectly 100% of shares in Volue AS. None of the companies have observable market values in form of market price or similar. 172 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 SUMMARISED FINANCIAL INFORMATION FOR MATERIAL ASSOCIATES AND JOINT VENTURES The tables below provide summarised ﬁnancial information for Faraday Topco AS for 2024 (2 months) on 100% basis: Summarised balance sheet 2024 Intangible assets 7 094 Property, plant and equipment 158 Net pension assets 11 Non-current receivables and other investments 25 Deferred tax asset 30 Total non-current assets 7 317 Inventories 34 Contract assets 78 Accounts receivables 332 Other receivables 153 Cash and cash equivalents 238 Total current assets 836 Total assets 8 154 Non-current interest-bearing debt 292 Other non-current liabilities 18 Deferred taxes 77 Non-current RoU liabilities 101 Total non-current liabilities 488 Accounts payable 267 Current interest-bearing debt 149 Payable income tax 41 Contract liabilities 42 Current RoU liabilities 38 Other current liabilities 424 Total current liabilities 962 Total liabilities 1 450 Net assets 6 703 Summarised statement of comprehensive income 2024 Revenues 299 Materials and consumables used -52 Employee beneﬁt expense -253 Other operating cost -58 EBITDA -64 Depreciation and amortisation -34 Net ﬁnancial items -9 Income tax expense 16 Net proﬁt for the year -91 Other comprehensive income -4 Total comprehensive income -95 INTRODUCTION ABOUT PERFORMANCE CORPORATE GOVERNANCE SUSTAINABILITY FINANCIAL SIGNATURES 173 Note 12 Other receivables (1 000 NOK) Group Parent Company 2024 2023 2024 2023 LONG-TERM INVESTMENTS Loans to employees 23 695 47 249 22 379 15 301 Contributions to company pension plan 22 002 22 001 22 002 22 001 Other non-current receivables 19 514 66 632 18 323 17 341 Shares in other companies 74 652 88 283 68 562 77 275 Other investments 41 338 41 571 6 213 1 999 Total long-term investments 181 201 265 736 137 479 133 917 Security provided for loans to employees All loans to employees incur interest at a rate that never triggers a taxable beneﬁt. The loans are repaid over 5 years (vehicles) or 20 years (housing). Loans exceeding NOK 200,000 are secured by mortgages on property or shares. Note 13 Inventories and contracts with customers (1 000 NOK) INVENTORIES Group 2024 2023 Raw materials 339 639 429 378 Work in progress 166 834 479 871 Spare parts 36 763 46 653 Finished goods 260 021 324 321 Total inventories (net after provision for obsolescence) 803 257 1 280 223 Provision for obsolescence 128 726 99 885 The provision for obsolescence in 2024 is mainly related to slow-moving items in ENRX NOK 72 million (NOK 55 million), spare parts in NSSL NOK 10 million (NOK 8 million) and smaller and larger size fractions of powders in Tekna NOK 47 million (NOK 36 million). Construction contracts (sales over time) The subsidiaries ENRX, Tekna, NSSL and Volue (2023) recognise construction contracts in accordance with percentage of comple- tion method. Changes during the year are due to most contracts having a duration less then a year. At year-end these subsidiaries had the following carrying amounts associated with construction contracts andprojects in progress: Group 2024 2023 Contract assets 218 813 182 239 Contract liabilities 151 808 239 890 Net contract assets / - liabilities 67 005 -57 651 Contract liabilities consist of prepayments from customers for both revenue over time and point in time. Group 2024 2023 Booked income from uncompleted contracts per 31.12 Booked accrued income per 31.12 360 033 374 894 Booked accrued expenses per 31.12 -222 381 -219 136 Reported margin per 31.12 137 652 155 758 Group 2024 2023 Remaining income from sales over time contracts Within one year 250 748 320 352 Between one and two years 994 Remaining income (sales over time) 250 748 321 347 174 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Note 13 Inventories and contracts with customers cont. (1 000 NOK) Contract Assets Posted gross value of contract assets are distributed as follows: Receivables 2024 2023 Volue Group 58 536 ENRX Group 206 962 93 721 Tekna Group 11 851 29 982 Sum 218 813 182 239 Provisions for expected losses on projects are distributed as follows: Onerous contracts 2024 2023 Volue 13 500 Sum 13 500 Provisions are calculated based on historical losses and individual assessment of each item and customer Changes in the period's provisions are explained as follows: Onerous contracts Group 2024 2023 Total Opening Balance 13 500 16 963 Changes in expected losses (loss rates) and outstanding receivables (volume) 1 876 Discontinued operations -13 500 Realized losses during the period (-) -5 339 Exchange differences on translation of foreign operations Closing Balance 13 500 Note 14 Trade and other receivables (1 000 NOK) Group Parent Company 2024 2023 2024 2023 ACCOUNTS RECEIVABLES Trade accounts receivables 590 830 1 104 165 15 407 2 328 Loss allowance (Note 16) -21 605 -59 742 Trade accounts rec, IC 5 833 19 799 Total 569 225 1 044 423 21 240 22 127 OTHER RECEIVABLES Intercompany loans - current 145 242 217 777 Other current receivables 191 605 249 647 8 175 3 246 Total 191 606 249 648 153 417 221 022 Advances paid to suppliers 67 315 88 375 Accrued revenues at the point in time 30 544 18 782 Total 97 859 107 156 Note 15 Cash and cash equivalents (1 000 NOK) Group Parent Company 2024 2023 2024 2023 Cash and cash equivalents 1 799 668 1 928 652 913 390 1 064 083 Here of restricted cash 36 722 35 357 3 360 2 543 INTRODUCTION ABOUT PERFORMANCE CORPORATE GOVERNANCE SUSTAINABILITY FINANCIAL SIGNATURES 175 (1 000 NOK) Note 16 Financial risk management / ﬁnancial instruments cont. The breakdown of the parent company’s ﬁnancial assets is as follows: FINANCIAL ASSETS AT FAIR VALUE THROUGH OCI Number of shares Shareholding in % Fair value 2024 2023 2024 2023 2024 2023 Listed shares Kongsberg Gruppen 25 812 25 812 0,01% 0,01% 33 039 11 922 Spotlio 423 167 423 167 0,21% 0,21% 101 106 Norse Atlantic 320 625 320 625 0,26% 0,26% 1 281 3 880 Total listed shares 34 421 15 907 Financial assets at fair value through OCI 34 421 15 907 FAIR VALUE – CHANGE DURING THE YEAR: Financial assets at fair value through OCI 2024 2023 Balance at 1 January 15 907 11 830 Change in ﬁnancial assets at fair value through OCI 18 514 2 088 Proceed from sale of ﬁnancial assets at fair value -93 Purchase of ﬁnancial assets at fair value 2 081 Balance at 31 December 34 421 15 907 The following dividend is received: Kongsberg Gruppen tNOK 361 (tNOK 217). Change in assets at fair value are based on changes in the market values of listed shares. A sensitivity analysis indicates that a 10% change in fair value as at 31 December 2024 would change equity by tNOK 3.400and proﬁt for the year from continuing operations by tNOK 0 (2023: by tNOK 1.600 and tNOK 0 respectively). Financial risk management The company and the Group are exposed to credit risk, liquidity risk from the use of ﬁnancial instruments and market risk. The Board of Directors has overall responsibility for establishing and supervision of the Group’s guidelines on risk management. Principles, procedures and systems for risk management in the key areas are reviewed and assessed regularly. Industrial investments consist of a limited number of large investments. The investment strategy is based on the premise that long-term, active engagement provides the greatest return. Other investments are in liquid depositswith no connection to the Group. Credit risk Credit risk is the risk of ﬁnancial losses if a customer or counterparty to a ﬁnancial instrument is unable to fulﬁl their obligations. Credit risk normally arises when the company or Group extends credit to customers or invests in securities. Credit risk associated with investments is considered to be limited since investments are mainly made in liquid securities with a good creditworthiness. A speciﬁcation of the investments is given earlier in this note. The Group has routines to ensure that credit is only extended for sales to customers that have had no previous payment issues and that stay within their credit limit. Note 16 Financial risk management / ﬁnancial instruments cont. (1 000 NOK) The maximum exposure to credit risk associated with receivables at the balance sheet date was: Group Parent Company 2024 2023 2024 2023 Total receivables 863 505 1 405 772 174 657 243 149 Account receivables 590 830 1 044 423 15 407 2 328 Loss allowance 21 605 59 743 Trade receivables: Breakdown of the book value of outstanding trade receivables in: Overdue Account receivables 2024 Not due 1-30 days 31-60 days 61-90 days More than 90 days Trade accounts receivable Arendals Fossekompani ASA 15 366 41 15 407 ENRX Group 243 044 48 412 15 698 7 726 61 602 376 482 NSSL Global Limited Group 98 373 17 939 17 834 1 839 14 169 150 154 Tekna Group 24 400 10 329 1 584 1 744 38 057 AFK Property Group 1 819 200 2 019 Alytic Group 4 860 663 1 727 59 702 8 010 Vergia Group Ampwell Group 688 688 AFK Tyskland Group 14 14 Total 388 563 77 343 36 843 9 623 78 457 590 830 The company has applied impairment losses for expected credit losses as follows: Overdue Loss allowance 2024 Not due 1-30 days 31-60 days 61-90 days More than 90 days Loss allowance ENRX Group 872 45 129 5 7 550 8 601 NSSL Global Limited Group 228 105 10 3 11 119 11 465 Tekna Group 1 070 1 070 AFK Property Group 200 200 Alytic Group 270 270 Total 1 100 150 409 8 19 938 21 605 Expected credit losses (ECL) are measured based on a credit risk assessment on a customer by customer basis, using all available information and updated when appropriate. Credit losses for 2024 and 2023 have been minor. Changes in the period’s loss allowance are explained as follows: Group Group Loss allowance 2024 2023 Total Opening Balance 59 743 23 971 Changes in expected losses (loss rates) and outstanding receiv- ables (volume) -39 743 39 935 Realized losses during the period (-) -274 -2 997 Exchange differences on transla- tion of foreign operations 1 880 -1 167 Closing Balance 21 605 59 743 Breakdown of the book value of outstanding trade receivables in: Overdue Account receivables 2023 Not due 1-30 days 31-60 days 61-90 days More than 90 days Trade accounts receivable Arendals Fossekompani ASA 2 283 45 2 328 Volue Group 267 519 84 153 13 387 17 085 11 286 393 430 ENRX Group 302 182 54 533 31 409 9 330 49 197 446 650 NSSL Global Group 114 625 15 563 13 611 4 938 19 663 168 400 Tekna Group 26 662 8 901 10 256 2 732 27 685 76 235 AFK Property Group 408 700 93 1 201 Alytic Group 1 493 2 489 1 793 658 1 247 7 680 Vergia Group 168 168 Ampwell Group 4 506 753 1 542 1 194 46 8 042 AFK Tyskland Group 32 32 Total 719 877 167 092 71 999 35 937 109 261 1 104 166 The company has applied impairment losses for expected credit losses as follows: Overdue Loss allowance 2023 Not due 1-30 days 31-60 days 61-90 days More than 90 days Loss allowance Volue Group 1 125 1 775 2 591 2 857 8 347 ENRX Group 946 91 197 24 9 212 10 469 NSSL Global Group 144 910 97 147 7 676 8 974 Tekna Group 31 283 31 283 AFK Property Group 400 400 Alytic Group 270 270 Total 1 091 2 125 2 339 2 761 51 427 59 743 * Loss allowance in 2023 was related to the planned closing down of Imphytek Liquidity risk Liquidity risk is the risk that the Group will not be able to fulﬁl its ﬁnancial obligations as they fall due. The aim of liquidity management is to secure sufﬁcient liquidity to fulﬁl the obligations as they fall due, without this causing unacceptable losses to the company and the Group. Cash ﬂow from the company and the Group’s ordinary operations, combined with signiﬁcant investments in liquid securi- ties as well as unutilised credit facilities mean that the liquidity risk is considered to be low. Subsidiaries ENRX and NSSLGlobal have established an group account arrangement covering most of the subsidiaries. This includes currencies NOK, EURO, USD, SEK, DKK og GBP. This helps increase the ﬂexibility and efﬁciency of liquidity management The breakdown of the liabilities of the company and the Group is as follows: (Contractual cash ﬂows include interest calculated based on interest rates at the balance sheet date) (Contractual cash ﬂows of the bond loans that have maturity of 12 months or less are related to interest payments) Group 2024 Carrying amount Contractual cash ﬂows 6 months or less 6 to 12 months 1 to 2 years 2 to 5 years Over 5 years Accounts payable 276 936 276 936 276 861 75 Current interest-bearing debt 110 001 112 528 52 259 50 269 10 000 Bank overdraft 166 526 168 526 99 086 69 441 Current lease liabilities 60 437 63 967 33 937 30 030 Total current liabilities 613 900 621 957 462 143 149 815 10 000 Non-current bond loans 498 503 539 225 13 075 13 075 513 075 Non-current interest-bearing debt 776 474 969 084 16 669 18 680 341 491 140 188 452 056 Non-current lease liabilities 230 338 259 628 5 720 4 596 71 893 94 608 82 811 Total non-current liabilities 1 505 315 1 767 938 22 389 36 351 426 460 747 871 534 866 176 177 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE 2023 Carrying amount Contractual cash ﬂows 6 months or less 6 to 12 months 1 to 2 years 2 to 5 years Over 5 years Accounts payable 512 917 512 917 512 917 - Current interest-bearing debt 234 715 238 411 233 619 4 792 Bank overdraft 168 745 181 646 47 968 133 678 Current lease liabilities 65 762 73 372 38 117 34 679 241 Total current liabilities 982 140 1 006 347 832 620 173 149 241 Non-current bond loans 498 042 555 569 13 075 13 075 529 419 Non-current interest-bearing debt 1 745 430 2 004 849 38 601 37 493 68 034 786 019 1 074 701 Non-current lease liabilities 226 537 296 663 77 791 120 890 97 982 Total non-current liabilities 2 470 010 2 857 081 38 602 50 569 158 899 1 436 329 1 172 683 Parent Company 2024 Carrying amount Contractual cash ﬂows 6 months or less 6 to 12 months 1 to 2 years 2 to 5 years Over 5 years Accounts payable 17 726 17 726 17 726 Current interest-bearing liab, IC Current lease liabilities 2 127 5 083 2 541 2 541 Total current liabilities 19 853 22 808 20 267 2 541 Non-current bond loans 498 503 539 225 13 075 13 075 513 075 Non-current interest-bearing debt 309 718 396 559 8 134 8 134 16 269 48 805 315 217 Non-current lease liabilities 57 923 76 538 5 083 14 516 56 939 Total non-current liabilities 866 143 1 012 322 8 134 21 209 34 427 576 396 372 156 2023 Carrying amount Contractual cash ﬂows 6 months or less 6 to 12 months 1 to 2 years 2 to 5 years Over 5 years Accounts payable 11 852 11 852 11 852 Current interest-bearing liab, IC 36 416 36 416 36 416 Current lease liabilities 2 293 5 360 2 680 2 680 Total current liabilities 50 561 53 628 14 532 39 096 Non-current bond loans 498 042 555 569 13 075 13 075 529 419 Non-current interest-bearing debt 964 324 1 130 653 27 722 27 722 27 722 83 165 964 324 Non-current lease liabilities 57 965 78 314 4 898 14 328 59 088 Total non-current liabilities 1 520 331 1 764 536 27 722 40 797 45 695 626 912 1 023 412 For other receivables and payables measured at amortised cost the book value is assumed to equal the fair value. For contractual cash ﬂows related to derivatives we refer to hedge accounting further below. Market risk Market risk is the risk that changes in market prices such as exchange rates, interest rates and share prices will impact net income or the value of ﬁnancial instruments. Foreign exchange risk The company and the Group are exposed to foreign exchange risk on purchases, sales and loans in currencies other than the compa- nies' functional currency. The Group’s main exposure is to EUR, GBP and USD. The foreign exchange exposure is primarily associated with operations in the Group’s foreign subsidiaries and with the company’s and the Group’s liabilities in foreign currency. The ENRX subgroup uses derivatives to limit foreign exchange risk associated with sales and trade receivables. The parent company and ENRX also use foreign currency loans and currency swaps to limit foreign exchange risk associated with changes in value in the subsidiar- ies. The main foreign currency exposure in the parent company and the Group’s Norwegian subsidiaries is to EUR. Group Parent Company (1 000 EUR) 2024 2023 2024 2023 Bank deposits 3 844 9 408 243 Trade receivables 17 314 31 468 50 Trade payables 737 -3 457 -164 Interest-bearing liabilities -9 689 -20 905 Balance sheet exposure (foreign exchange risk) 12 206 16 514 293 -164 A sensitivity analysis indicates that a 5% appreciation of NOK against EUR as at the year-end would impact earnings for the Group in 2024 by the equivalent of MEUR -0.6 and in 2023 by the equivalent of MEUR -0.8. The amounts are stated before taxes. Other subsid- iaries have only modest exposure to currencies other than the company’s functional currency. Hedge accounting The derivative ﬁnancial assets are all net settled. Therefore, the maximum exposure to credit risk at the reporting date is the fair value of the derivative assets which are included in the consolidated statement of ﬁnancial position. The customer payments in for- eign currencies in order backlog is hedged according to NOK according to strategy. Cash ﬂow hedge accounting is generally applied to qualifying foreign currency hedges. Under the ENRX hedge accounting model, the portion of the fair value change related to a change in the spot rate is recognised in the fair value reserve within equity until the cumulative proﬁt or loss is recycled to the state- ment of income simultaneously with the hedge item.There is no inefﬁciency in the hedging - see Note 8 Financial items". At year-end the companies had the following forward currency contracts speciﬁed as hedging: (1 000 NOK) 2024 Contract value Unrealised gains/losses Hedging of future cash ﬂows Fair value hedging 150 366 2 096 Balance sheet exposure (hedging) 150 366 2 096 2023 Contract value Unrealised gains/losses Hedging of future cash ﬂows Fair value hedging 62 493 885 Balance sheet exposure (hedging) 62 493 885 Unrealised gains/losses relating to hedging of future cash ﬂows are recognised in “Other comprehensive income”. The unrealised loss shown in the table is the value before deducting tax. Net unrealised losses/gains are recognised as other current liabilities/assets. Nominal value, carrying amount and maturity of forward currency contracts: Nominal amount Carrying amount 2025 2026 2027 (currency) (NOK '000) Currency EUR 10 386 10 386 4 368 USD 4 050 4 050 -2 195 JPY 17 300 17 300 19 GBP 430 430 -97 Total 2 096 Change in carrying amount in the period: 2024 2023 Balance at 1 January 885 1 869 Changes in value posted as OCI -941 -5 535 Reclassiﬁes from equity to income statement 2 152 4 551 Balance at 31 December 2 096 885 Asset 4 815 4 545 Liabilities 2 719 3 660 Total 2 096 885 178 179 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE 180 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Interest rate risk Most of the company’s and the Group’s interest-bearing ﬁnancial assets and liabilities accrue interest at variable rates. In 2021 the parent company took out a bond of MNOK 500 at an ﬁxed interest rate of 2,615%. An overview of interest-bearing assets can be found earlier in this note and of liabilities in Note 17. A 1% change in interest rates would affect earnings, and proﬁt and ﬁnancial items through the year, by a net amount of around NOK -0,9 million. The amount is stated before taxes. Price risk for energy sales Most of the company’s and the Group’s energy sales take place in the spot market, which means there is exposure to risk associated with price ﬂuctuations. In the past two years no energy derivatives have been used as hedging instruments to limit the risk. Market risk relating to securities The company and the Group are exposed to price risk on investments in equity instruments classiﬁed as ﬁnancial assets at fair value through OCI and ﬁnancial assets at fair value throiugh income statement. All decisions on signiﬁcant purchases and sales are made by the Board of Directors. The main objective of the investment strategy is to maximise the return through ongoing dividends and increases in the value of the portfolio. An overview of the company’s ﬁnancial assets is given earlier in this note. BOND LOAN (1 000 NOK) Group Parent Company 2024 2023 2024 2023 Book value Fair value Book value Fair value Book value Fair value Book value Fair value LIABILITIES Bond loans 498 503 461 250 498 042 457 800 498 503 461 250 498 042 457 800 Unrecognized income between book- and fair value -37 231 -40 242 -37 253 -40 242 FAIR VALUE CATEGORIES FINANCIAL ASSETS AND LIABILITIES 2024 Group Parent Company Carrying amount ﬁnancial assets Fair value through income Fair value through OCI Amort. cost Sum Fair value through income Fair value through OCI Amort. cost Sum Trade and other receivables 791 397 791 397 29 415 29 415 Cash and cash equivalents 1 799 668 1 799 668 913 390 913 390 Financial assets at fair value through OCI 34 421 34 421 34 421 34 421 Financial assets at fair value through income statement 74 652 74 652 68 562 68 562 Loans to Group companies 852 272 852 272 Derivatives 4 815 4 815 Sum 79 468 34 421 2 591 064 2 704 953 68 562 34 421 1 795 076 1 898 058 Carrying amount ﬁnancial liabilities Derivative liabilities 2 719 2 719 Interest-bearing loans and borrowings 1 068 796 1 068 796 309 718 309 718 Bond loans 498 503 498 503 498 503 498 503 Trade and other payables 276 936 276 936 17 726 17 726 Liabilities to Group companies Sum 2 719 1 844 235 1 846 955 825 946 825 946 INTRODUCTION ABOUT PERFORMANCE CORPORATE GOVERNANCE SUSTAINABILITY FINANCIAL SIGNATURES 181 2023 Group Parent Company Carrying amount ﬁnancial assets Fair value through income Fair value through OCI Amort. cost Sum Fair value through income Fair value through OCI Amort. cost Sum Trade and other receivables 1 294 088 1 294 088 25 373 25 373 Cash and cash equivalents 1 928 652 1 928 652 1 064 083 1 064 083 Financial assets at fair value through OCI 15 907 15 907 15 907 15 907 Financial assets classiﬁed as held for sale Financial assets at fair value through income statement 88 283 88 283 77 275 77 275 Loans to Group companies 1 602 210 1 602 210 Derivatives 4 545 4 545 Sum 92 828 15 907 3 222 740 3 331 475 77 275 15 907 2 691 666 2 784 847 Carrying amount ﬁnancial liabilities Derivatives, interest and currency swaps Derivative liabilities 3 660 3 660 Interest-bearing loans and borrowings 2 179 669 2 179 669 964 324 964 324 Bond loans 498 042 498 042 498 042 498 042 Trade and other payables 512 917 512 917 11 852 11 852 Liabilities to Group companies 36 416 36 416 Sum 3 660 3 190 627 3 194 288 1 510 634 1 510 634 Fair value hierarchy The table below analyses ﬁnancial instruments measured at fair value according to valuation method. The different levels are deﬁned as follows: Level 1: Fair value is measured using listed prices from active markets for identical ﬁnancial instruments. No adjustment is made to these prices. Level 2: Fair value is measured using other observable inputs than those used at level 1, either directly (prices) or indirectly (derived from prices). Level 3: Fair value is measured using inputs that are not based on observable market data (unobservable inputs). 2024 Level 1 Level 2 Level 3 Sum Financial assets at fair value through OCI 34 421 34 421 Financial assets at fair value through income statement 74 652 74 652 Bond loans -461 250 -461 250 Total -426 829 74 652 -352 177 Other derivative ﬁnancial assets 4 815 4 815 Interest and currency swaps related to bond loans Other derivative ﬁnancial liabilities -2 719 -2 719 Grand Total -424 733 74 652 -350 081 2023 Level 1 Level 2 Level 3 Sum Financial assets at fair value through OCI 15 907 15 907 Financial assets at fair value through income statement 88 283 88 283 Bond loans -457 800 -457 800 Total -441 893 88 283 -353 609 Other derivative ﬁnancial assets 4 545 4 545 Interest and currency swaps related to bond loans Other derivative ﬁnancial liabilities -3 660 -3 660 Grand Total -441 008 88 283 -352 724 The fair value of the Bond loan is determined by using the indexed tax validation rules at year-end. The index is publicly available. Note 17 Interest-bearing debt (1 000 NOK) This note provides information on the contractual terms of the Group’s interest-bearing loans and borrowings. For more information on the Group’s interest rate risk and foreign exchange risk see Note 16. Note 17.1 Bond loans Group / Parent 2024 2023 2,516 % 2021 - 2028 500 000 500 000 Capitalised loan costs -1 497 -1 958 Bond loans - booked value 498 503 498 042 Fair value (ref note 16) 461 250 457 800 Note 17.2 Debenture loans Parent Company 2024 2023 Euribor + ﬁxed margin Floating interest 315 218 968 474 Capitalised loan costs -5 500 -4 150 Total denenture loans parent company 309 718 964 324 Subsidiaries Volue Group Floating interest 342 023 Tekna Group Fixed interest rate 26 202 8 255 Tekna Group Debenture loans 8 086 23 083 ENRX Group Floating interest 375 320 282 183 AFK Property Group Floating interest 161 689 316 628 Alytic AS Floating interest 21 256 10 946 Ampwell Consolidated Floating interest 32 718 Total Debenture loans Subsidiaries 592 552 1 015 836 Total Debenture loans Group 902 270 1 980 160 Note 17.3 Loans secured by pledged assets Group Parent Company 2024 2023 2024 2023 Non-current interest- bearing debt 408 864 457 338 Bank overdraft 56 664 86 973 Total 465 529 544 312 Note 17.4 Loans are secured by the following pledged assets Buildings and land 262 092 219 036 Vehicles, machinery and equipment 194 261 202 067 Inventories 344 044 370 041 Trade receivables 305 534 275 177 Total security 1 105 931 1 066 322 Security for promissory note and bond loans with a countervalue of MNOK 500 taken out in the parent company has been given in the form of negative pledges. Trade receivables in two of the subsidiaries have been pledged as security for bank guarantees and overdrafts given. For the Group the value-adjusted equity must be at least 40% and have a value of at least MNOK 1 500. For ENRX the equity must be at least 30%, and cash reserve > MEUR 5. Tekna have some covenants connected to operational activi- ties, but none ﬁnancial covenants.All the companies are in compliance with the requirements of their covenants at 31 December 2024. Note 18 Trade payables, provisions and other current liabilities (1 000 NOK) Group Parent Company 2024 2023 2024 2023 Trade payables 267 835 485 561 16 443 10 527 Other payables 9 102 27 356 Trade acc payable, IC 1 283 1 324 Account Payables 276 936 512 917 17 726 11 852 Note 18.1 Provisions Group 2024 Total Opening Balance Changes in expected losses (loss rates) and outstanding receivables (volume) Realized losses during the period (-) Total Effect from Foreign Exchange Closing Balance Restructuring 6 551 -6 777 226 Earn-out Warranties / Guaranties 3 684 24 178 -5 266 1 432 24 029 Other provisions 32 953 28 159 -1 252 2 762 62 622 Onerous contracts 13 500 -13 500 Total provisions 56 688 32 061 -6 518 4 420 86 652 Group 2023 Total Opening Balance Changes in expected losses (loss rates) and outstanding receivables (volume) Realized losses during the period (-) Total Effect from Foreign Exchange Closing Balance Restructuring 40 268 -37 085 3 368 6 551 Earn-out 60 431 -60 431 Warranties / Guaranties 3 603 -88 170 3 684 Other provisions 33 969 -1 230 214 32 953 Onerous contracts 16 963 1 876 -5 339 13 500 Total provisions 117 662 39 448 -104 173 3 752 56 688 Parent Company 2024 Total Opening Balance Changes in expected losses (loss rates) and outstanding receivables (volume) Realized losses during the period (-) Total Effect from Foreign Exchange Closing Balance Restructuring Earn-out Warranties / Guaranties Other provisions 1 600 35 900 37 500 Onerous contracts Total provisions 1 600 35 900 37 500 Parent Company 2023 Total Opening Balance Changes in expected losses (loss rates) and outstanding receivables (volume) Realized losses during the period (-) Total Effect from Foreign Exchange Closing Balance Restructuring Earn-out Warranties / Guaranties Other provisions 1 600 1 600 Onerous contracts Total provisions 1 600 1 600 182 183 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE PROVISIONS SUMMARY Group Parent Company 2024 2023 2024 2023 Total Opening Balance 56 688 117 662 1 600 Changes in expected losses (loss rates) and outstanding receivables (volume) incl. disposals 32 061 39 448 35 900 1 600 Realized losses during the period (-) -6 518 -104 173 Total Effect from Foreign Exchange 4 420 3 752 Closing Balance 86 652 56 688 37 500 1 600 Note 18.2 Speciﬁcation of Accruals Group Parent Company 2024 2023 2024 2023 Accrued Labor cost / holiday pay 84 972 127 080 5 273 7 686 Accrued Bonus 70 432 91 015 12 000 12 000 Paid in collaterals 42 407 Accrued operating cost 258 745 276 332 1 426 4 680 Other current liability 105 589 275 175 1 269 Total accruals 519 739 812 009 19 967 24 366 Note 19 Leases (1 000 NOK) CARRYING AMOUNT RIGHT-OF-USE ASSETS Group Parent Company 2024 2023 2024 2023 Buildings 257 303 260 696 57 507 58 742 Vehicles, machinery and equipment 14 662 16 629 168 Sum 271 965 277 324 57 507 58 910 Lease liabilities Group Parent Company 2024 2023 2024 2023 Current lease liabilities 60 437 65 762 2 127 2 293 Non-current lease liabilities 230 338 226 537 57 923 57 965 Sum 290 774 292 299 60 050 60 258 Income effects Group Parent Company 2024 2023 2024 2023 Buildings depreciation 52 330 71 355 3 488 3 522 Vehicles, machinery and equipment 7 355 7 526 168 126 Sum depreciation 59 684 78 881 3 656 3 648 Interest expense on lease 9 959 6 117 3 072 3 060 We refer to note 5 for a speciﬁcation of the movements of Right-of-Use assets. Note 20 Events after the reporting period On 13 February 2025, the Board of Directors decided to pay an ordinary cash dividend of NOK 1.00 per share for the fourth quarter 2024. The dividend was paid on 28 February 2025. Mr. Claude Jean has been appointed as the new CEO of Tekna Holding ASA effective from April 28, 2025. Note 21 Accounting estimates and assessments Key accounting estimates Key accounting estimates are estimates that are important for the presentation of the company’s and the Group’s ﬁnancial position and earnings, and which require subjective assessment. Arendals Fossekompani assesses such estimates continually based on historical results and experience, consultation with experts, trends, forecasts and other methods considered reasonable in each individual case. Impairment losses Goodwill and other intangible assets with an indeﬁnite life are tested for impairment annually. The company’s investments in subsidiaries and associates are similarly tested for impairment. The assessments are based on analysis of the company's ﬁnancial position and forecasts/outlook. Recoverable amounts that are measured against carrying amounts are the expected selling price or the present value of cash ﬂows from the investment. Other assets, including property, plant and equipmentand ﬁnancial instruments available for sale, are tested for impairment when there is an indication that a fall in value may have occurred. Construction contracts The Group recognises revenue from individual projects in accordance with the percentage of completion method. For such projects the degree of completion is calculated as costs incurred relative to total estimated costs. The greatest uncertainty is associated with measurement of the project’s total estimated costs. The group has implemented controls to ensure that accounting for revenue over time reﬂects management's best estimate with respect to total contract revenue, cost, and if applicable stage of completion. The group uses the stage of completion method to determine the contract revenue recognised over time in the period. The method to determine the stage of completion is costs spent compared to total estimated costs or direct labour spent compared to total esti- mated direct labour. The estimation uncertainty is primarily related to cost calculation and measurement of progress. When proj- ect's remaining costs cannot be reliaby estimated, only revenues equal to the accrued project costs will be recognised as revenues. Note 22 Earnings per share in NOK Basic earnings per share/diluted Basic earnings per share are based on proﬁt attributable to the equity holders of the parent and the weighted average number of outstanding ordinary shares during the year, which was 54.936.418 (2023: 54.832.135), calculated as follows: Proﬁt attributable to ordinary shares (1 000 NOK) 2024 2023 Net proﬁt for the year - total 2 244 137 -29 520 Minority interest 6 558 -62 110 Equity holders of the parent 2 237 579 32 590 Proﬁt attributable to ordinary shares (1 000 NOK) 2024 2023 Net proﬁt for the year - continued -42 316 61 309 Minority interest 6 558 -62 110 Equity holders of the parent -48 874 123 419 Proﬁt attributable to ordinary shares (1 000 NOK) 2024 2023 Net proﬁt for the year - discontinued 2 286 453 -90 829 Minority interest 6 558 -62 110 Equity holders of the parent 2 279 895 -28 719 Weighted average number of ordinary shares Issued ordinary shares, 1 January 55 995 250 55 995 250 Effect of treasury shares -1 058 832 -1 137 911 Number of outstanding shares as at 31 Dec 54 936 418 54 857 339 Weighted average number of ordinary shares for the year 54 896 879 54 832 135 Basic earning per share (NOK) Total 40.76 0.59 Continued (0.89) 2.25 Discontinued 41.53 (1.66) 184 185 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE 186 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Note 23 The 20 largest shareholders Number of shares Shareholding Ulefoss Invest AS 14 709 875 26,8 % Havfonn AS 14 567 900 26,5 % Must Invest AS 14 106 225 25,7 % Arendals Fossekompani ASA 1 058 832 1,9 % Svanhild og Arne Must Fond 657 225 1,2 % Folketrygdfondet 473 060 0,9 % Fabulous AS 453 853 0,8 % Per-Dietrich Johansen 375 375 0,7 % Fondsﬁnans Pensjonskasse 356 228 0,6 % Fløtemarken AS 323 671 0,6 % Erik Bøhler 280 100 0,5 % Sverre Valvik AS 266 000 0,5 % Bøhler Invest AS 265 000 0,5 % Aksel Oland 237 994 0,4 % Ropern AS 237 478 0,4 % Annelise Altenburg Must 216 675 0,4 % Ottersland AS 200 000 0,4 % Erik Christian Must 180 000 0,3 % Trine Must 180 000 0,3 % Falck Frås AS 170 000 0,3 % 49 315 491 89,8 % With reference to section 7-26 of the Norwegian Accounting Act the following can be disclosed concerning shares owned by individual Board members and the CEO, including shares owned by spouses, children who are minors or by companies in which the person in question has a controlling interest. Board of Directors Own holdings Related parties Total Trond Westlie 7 048 7 048 Morten Bergesen 14 567 900 14 567 900 Didrik Vigsnæs 18 000 18 000 Arild Nysæther Lise Lindback Anne Grethe Dalane 1 000 1 000 Stine Rolstad Brenna 7 500 7 500 8 048 14 593 400 14 601 448 Senior executives Benjamin Golding 50 999 50 999 Lars Peder Fensli * 32 144 32 144 Håkon Tanem 56 172 56 172 Torkil Mogstad * 15 019 15 019 Ingunn Ettestøl 19 412 19 412 Ann-Kari Heier 16 978 16 978 190 724 190 724 * See Note 4 regarding share-based payments. Note 24 Related parties The company’s/Group’s related parties comprise subsidiaries, associates and members of the Board of Directors and senior management team. Key executives Members of the Board of Directors and the company management and their closest relations control 26,4% of shares with voting rights in the company. Loans to senior executives (see Note 4) amounted to tNOK 15.664 (2023: tNOK 11.687) as at 31 December. These loans are included in “other investments”. Interest is charged on loans to senior executives at a rate that never triggers a taxable beneﬁt. In addition to regular salaries, senior executives have agreements on other beneﬁts in the form of a deﬁned-contri- bution pension scheme and share-based payments. (See Note 4). In 2023, the Chairman has received a fee of tNOK 500 for consul- tancy services provided by his company Shama AS. (See Note 4). Related party transactions Transactions between Group companies and other related parties are based on the principles of market value and arm’s length.In 2024 Arendals Fossekompani purchased services relating to market management for tNOK 854 from Volue Market Services (2023: tNOK 921). In addition services were purchased from Volue Insight AS for tNOK 537 in 2024.Arendals Fossekompani ASA supply AFK Property and Alytic with administrative services, all invoiced based market value. Interest is charged on loans from the AFK parent company to companies in the Group in accordance with the agreement entered into. INTRODUCTION ABOUT PERFORMANCE CORPORATE GOVERNANCE SUSTAINABILITY FINANCIAL SIGNATURES 187 Note 25 Change in loans and borrowings (1 000 NOK) Note Loans maturing after more than one year Loans maturing in less than one year Total interest- bearing liabilities 2024 2023 2024 2023 2024 2023 GROUP Total Opening Balance 2 500 788 1 085 804 469 222 340 163 2 970 010 1 425 967 Cash from new borrowings CF 249 599 1 322 068 249 599 1 322 068 Repayment of non-current lease liabilities CF -68 966 -44 767 -68 966 -44 767 Repayment of long- term borrowings CF -1 040 193 -117 524 -1 040 193 -117 524 Cash ﬂow from net change in current interest bearing debt CF 35 973 277 552 35 973 277 552 Change in lease liabilities without cash ﬂow effects 5 123 003 83 064 123 003 83 065 Disposal / Unspeciﬁed Movement -324 277 676 -179 723 2 962 -504 000 3 638 Reclassiﬁcation 172 496 -172 496 Total Effect from Foreign Exchange 56 814 -1 029 11 491 21 041 68 305 20 011 Closing Balance 1 521 110 2 500 788 336 964 469 222 1 858 073 2 970 010 PARENT COMPANY Total Opening Balance 1 520 331 711 146 2 293 2 300 1 522 624 713 446 Cash from new borrowings CF 188 474 825 485 188 474 825 485 Repayment of long- term borrowings CF -876 002 -2 293 -876 002 -2 293 Cash ﬂow from net change in current interest bearing debt CF -166 -7 -166 -7 Change in lease liabilities without cash ﬂow effects 2 254 -5 973 2 254 -5 973 Total Effect from Foreign Exchange 31 086 -8 034 31 086 -8 034 Closing Balance 866 143 1 520 331 2 127 2 293 868 270 1 522 624 Group (1 000 NOK) 2024 2023 Bond 498 503 498 042 Interest-bearing liabilities and credits (long-term) 776 474 1 745 430 Other non-current liabilities 15 795 30 778 Non-current lease liabilities 230 338 226 537 Loans maturing after more than one year 1 521 110 2 500 788 Interest-bearing liabilities and credits (short-term) 276 527 403 460 Current lease liabilities 60 437 65 762 Loans maturing in less than one year 336 964 469 222 Total interest- bearing liabilities 1 858 073 2 970 010 Parent Company (1 000 NOK) 2024 2023 Bond 498 503 498 042 Interest-bearing liabilities and credits (long-term) 309 718 964 324 Non-current lease liabilities 57 923 57 965 Loans maturing after more than one year 866 143 1 520 331 Interest-bearing liabilities and credits (short-term) Current lease liabilities 2 127 2 293 Loans maturing in less than one year 2 127 2 293 Total interest- bearing liabilities 868 270 1 522 624 Note 26 Climate-related risks Arendals Fossekompani has assessed climate-related risks based on the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) as part of its double materiality assessment. The assessment covers Arendals Fossekompani’s and our portfolio’s exposure to transition risks and opportunities, as well as physical risks. Under a Net Zero 2050 scenario, key transition risks included market, technology and policy/legal risks, and opportunities within new markets and clean energy. The portfolio’s physical risk has been assessed using climate modelling in IPCC climate scenarios, considering exposure to climate hazards events at our ofﬁces and production sites and in our value chain where possible. There is a physical risk of disruption to our facilities and value chains due to climate hazards, but the consequences are highly uncertain, and the risk is being mitigated by our investments in infrastructural upgrades. To ensure the resilience of our business model Arendals Fossekompani is actively pursuing opportunities related to demand for solutions related to renewable energy through our investment strategy. We also have ongoing assessments related to climate- related risks, and other internal initiatives to reduce climate risk exposure and to mitigate transitional risks of increased costs related to mandates and regulation of existing products and services in the portfolio. Arendals Fossekompani follows developments and will regularly assess its portfolio risk exposure to transitional and physical climate risks. Further detail on the process, scenarios and ﬁndings are documented in the Sustainability Statement. Note 27 Contingent liabilities In January 2019, Tekna Plasma Systems Inc. ﬁled a lawsuit in Federal Court against AP&C Advanced Powders & Coatings Inc., challenging the validity of Canadian patents 3,003,502 and 3,051,236 and seeking a non-infringement declaration, while AP&C counterclaimed for infringement; the trial took place in fall 2022. On June 7, 2024, the Federal Court ruled in Tekna’s favor, declaring patent ‘502 entirely invalid and not infringed, and most claims of patent ‘236 invalid and not infringed, though some ‘236 claims were upheld as valid but not contested by AP&C for infringement. AP&C appealed this ruling (ﬁle A-274-24), aiming to overturn it, with a hearing expected in late 2025 or early 2026, and Tekna is actively defending the decision. A second Federal Court decision on December 5, 2024, ordered AP&C to pay Tekna $2.9 million for partial legal costs, which AP&C paid in December 2024, but AP&C has also appealed this cost award (ﬁle A-55-25), with proceedings just beginning. If both rulings are upheld on appeal, the case may conclude; however, if overturned, Tekna could face repaying the $2.9 million and potentially additional damages to AP&C, depending on the appeal outcomes. NIBD AFK Vannkraft Group Management NSSL Global Ltd. Group ENRX Group 2024 2023 2024 2023 2024 2023 2024 2023 Bond 498 503 498 042 Non-current inter- est-bearing debt 309 718 964 324 277 974 255 531 Interest- bearing current borrowings 85 449 26 606 1st year installm. non-current borrowings 102 45 Bond Interest and ex rate swap (curr.) Non-current lease liabilities 57 923 57 965 52 238 12 344 188 784 103 222 Current lease liabilities 2 127 2 293 12 156 4 860 46 344 32 660 Bank overdraft 6 172 7 990 160 354 85 186 Current and non current liabilities IC 2 452 38 779 -25 -149 440 607 409 303 Total liabilities 870 722 1 561 404 70 541 25 046 1 199 614 912 553 Cash and cash equivalents 914 110 1 064 636 544 294 371 465 145 655 135 939 Intercompany loans - non current Intercompany loans - current Financial assets classiﬁed as held for trading Total assets 914 110 1 064 636 544 294 371 465 145 655 135 939 Net interest bearing debt -43 387 496 768 -473 752 -346 420 1 053 958 776 613 188 189 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE 190 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 Tekna Group AFK Property Group Alytic Group Other Total Segment 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 Bond 498 503 498 042 Interest and ex rate swap n-c Non-current inter- est-bearing debt 30 970 28 256 155 152 119 647 2 661 2 946 32 718 776 474 1 403 422 Interest-bearing current borrow- ings (inp) 192 292 14 595 8 000 100 044 226 898 1st year installm. non-current borrowings 3 318 3 083 6 537 4 689 9 957 7 817 Bond Interest and ex rate swap (curr.) Non-current lease liabilities 12 914 5 934 1 121 104 22 175 23 633 1 640 335 155 204 843 Current lease liabilities 5 105 4 572 454 524 791 135 2 975 66 977 48 018 Bank overdraft 166 526 93 176 Current and non current liabilities IC 217 477 161 072 110 972 70 698 4 306 4 710 1 011 548 876 508 1 787 339 1 560 922 Total liabilities 269 784 202 917 274 237 387 953 44 528 39 425 1 011 548 913 841 3 740 975 4 043 138 Cash and cash equivalents 97 463 77 906 61 550 27 232 30 713 35 261 5 834 34 780 1 799 891 1 747 220 Intercompany loans - non current 707 030 1 384 434 Intercompany loans - current 145 242 217 777 Financial assets classiﬁed as held for trading Total assets 97 463 77 906 61 550 27 232 30 713 35 261 5 834 34 780 2 652 163 3 349 430 Net interest bearing debt 172 321 125 011 212 686 360 721 13 815 4 163 1 005 715 879 061 1 088 812 693 707 INTRODUCTION ABOUT PERFORMANCE CORPORATE GOVERNANCE SUSTAINABILITY FINANCIAL SIGNATURES 191 Eliminations & Adjustments Total Consolidated 2024 2023 2024 2023 Bond 498 503 498 042 Interest and ex rate swap n-c Non-current inter- est-bearing debt 342 008 776 474 1 745 430 Interest-bearing current borrow- ings (inp) 100 044 226 898 1st year installm. non-current borrowings 9 957 7 817 Bond Interest and ex rate swap (curr.) Non-current lease liabilities -104 818 21 694 230 338 226 537 Current lease liabilities -6 540 17 744 60 437 65 762 Bank overdraft 75 570 166 526 168 745 Current and non current liabilities IC -1 775 727 -1 556 228 11 611 4 695 Total liabilities -1 887 085 -1 099 211 1 853 890 2 943 927 Cash and cash equivalents -223 181 432 1 799 668 1 928 652 Intercompany loans - non current Intercompany loans - current Financial assets classiﬁed as held for trading Total assets -223 -1 420 778 1 799 668 1 928 652 Net interest bearing debt -1 886 862 321 567 54 222 1 015 274 Signatures Declaration by the BoD and the CEO 194 Auditor's Reports 195 192 193 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Declaration by the Board of Directors and the CEO The single-entity ﬁnancial statements and consolidated ﬁnancial statements have been prepared in accordance with IFRS as adopted by the European Union, along with relevant interpretations, and in compliance with further disclosure requirements pursuant to the Norwegian Accounting Act applicable as at 31 December 2024. The Annual Report for the Group and Parent Company has been prepared in accordance with the provisions of the Norwegian Accounting Act and Norwegian Accounting Standard 16 as at 31 December 2024. The consolidated sustainability statements for 2024, as part of the management report have been pre- pared, in all material respects, in accordance with the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) pursuant to the Accounting Act § 2-3 and 2-4. Disclosures within the EU Taxonomy, are in all material respects, prepared in accordance with Article 8 of EU Taxonomy Regulation (EU 2020/852). TO THE BEST OF OUR KNOWLEDGE The ﬁnancial statements for 2024 for the Group and the Parent Company have been prepared in accordance with applicable accounting standards the information presented in the ﬁnancial statements provides a true and fair view of Group’s and the Parent Company’s assets, liabilities, ﬁnancial position and performance as a whole as at 31 December 2024. the Annual Report for the Group and the Parent Company provides a true and fair view of the develop- ment, results and ﬁnancial position of the Group and the Parent Company, and the key risks and uncertainties faced by the Group and the Parent Company. there are no material uncertainties associated with the annual ﬁnancial statements, and there are no other extraordinary circumstances that have affected the ﬁnancial statements. The Board of Directors conﬁrms that the accounts have been prepared based on the assumption that Arendals Fossekompani is a going concern, and that this assumption continues to apply. Froland, 10 April 2025 Trond Westlie, Chair Stine Rolstad Brenna, Board Member Lise Lindbäck, Board Member Morten Bergesen, Board Member Didrik Vigsnæs, Board Member Anne Grethe Dalane, Board Member Arild Nysæther Board Member Benjamin Golding, Chief Executive Ofﬁcer Report on the Audit of the Financial Statements PricewaterhouseCoopers AS, Kystveien 14, NO-4841 Arendal T: 02316, org. no.: 987 009 713 MVA, www.pwc.no Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap To the General Meeting of Arendals Fossekompani ASA Independent Auditor’s Report Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Arendals Fossekompani ASA, which comprise:  the financial statements of the parent company Arendals Fossekompani ASA (the Company), which comprise the statement of financial position as at 31 December 2024, the statement of income, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information, and  the consolidated financial statements of Arendals Fossekompani ASA and its subsidiaries (the Group), which comprise the statement of financial position as at 31 December 2024, the statement of income, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information. In our opinion  the financial statements comply with applicable statutory requirements,  the financial statements give a true and fair view of the financial position of the Company as at 31 December 2024, and its financial performance and its cash flows for the year then ended in accordance with IFRS Accounting Standards as adopted by the EU, and  the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2024, and its financial performance and its cash flows for the year then ended in accordance with IFRS Accounting Standards as adopted by the EU. Our opinion is consistent with our additional report to the Audit Committee. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by relevant laws and regulations in Norway and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided. We have been the auditor of Arendals Fossekompani ASA for 7 years from the election by the general meeting of the shareholders on 26 April 2018 for the accounting year 2018. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 194 195 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Report on the Audit of the Financial Statements Report on the Audit of the Financial Statements 3 / 6 Valuation of Goodwill and Intangible Assets At 31 December 2024, the carrying amount of the Group’s goodwill and intangible assets was NOK 1 006 576 thousand, equal to approximately 11% of total assets. Goodwill and intangible assets with indefinite economic life are tested for impairment at least annually. Impairment testing is performed at the level of cash generating unit. When testing for impairment, the carrying amount is compared to the recoverable amount. At 31 December 2024, management’s impairment assessment indicated that the recoverable amount exceeded the carrying amount for all cash generating units where goodwill and intangible assets were recognized. As a result, no impairment was recorded. We focused on valuation of goodwill and intangible assets because these assets constitute a significant share of the Group’s total assets, and because calculation of the recoverable amount requires application of significant judgement by management. Note 6 to the financial statements includes further information on goodwill and intangible assets, cash generating units and impairment testing. We obtained and gained an understanding of management’s impairment assessment related to goodwill and intangible assets. Our procedures included an assessment of the valuation method and whether key assumptions used by management appeared reasonable based on our understanding of the business and industry of each relevant cash generating unit. We tested the model for mathematical accuracy and traced data used in valuation models to supporting documentation. Based on our audit procedures we found that valuation methods used were reasonable and consistent with our understanding of the business and industry of each relevant cash generating unit. Our testing of data against supporting documentation did not uncover material exceptions. We also found that the model was mathematically accurate. While we did not find evidence to indicate that goodwill or intangible assets were impaired, we note that the valuation of cash generating units is sensitive to changes in management’s assumptions. Lastly, we evaluated the information disclosed in note 6 and found it to be appropriate and adequate. Accounting for Discontinued Operations – Commeo and Volue In Q2 2024, the Group announced an impairment related to the German subsidiary Commeo, which filed for bankruptcy in Germany in July 2024. The Group recognized a loss from discontinued operations of NOK 803 million related to Commeo. Further, in July 2024, the Group announced a joint voluntary cash offer by Edison Bidco AS for all shares in Volue ASA. The acquisition was completed on 28 October 2024. Upon completion of the acquisition, the Group retained a 40% indirect shareholding in Volue, classifying the investment as an associate. The Group recognized a gain from discontinued operations of NOK 3 083 million related to Volue. We considered the discontinued operations of Commeo and Volue to be a key focus area due to the material impact on the financial statements. Further, the transactions are of a non-routine nature, accounting considerations involved can be complex and there is an inherent risk of errors To consider whether classification as discontinued operations was appropriate, we obtained the underlying agreements and other documents supporting the transactions. We studied these documents to understand the transactions. To further deepen our understanding, we held discussions with management about the details and terms in the agreements. Our discussions included management's procedures to ensure appropriate accounting treatment of the transactions, and how management had evaluated the various aspects of the accounting and disclosure requirements, particularly the requirements in IFRS 5. We recalculated management’s calculation of loss on disposal of Commeo and gain on disposal of Volue. We traced the detailed information used in the calculations to supporting documentation. For the Volue transaction, we also performed audit procedures over subsequent initial recognition and 2 / 6 The Group’s business activities have changed compared to last year because of the sale of shares in Volue ASA and discontinuation of the investment in Commeo. Consequently, Accounting for Discontinued Operations – Commeo and Volue was considered a new area of focus this year. Furthermore, Revenue over Time from Contracts with Customers and Valuation of Goodwill and Intangible Assets carries the same characteristics and risks as in the prior year, and therefore continued to be areas of focus this year. Key Audit Matters How our audit addressed the Key Audit Matter Revenue over Time from Contracts with Customers In 2024, revenue recognized over time from contracts with customers constituted NOK 1 089 170 thousand, equal to 25% of total operating revenues. NOK 360 033 thousand of revenue recognized over time is accrued income from uncompleted contracts at the balance sheet date. We focused on revenue over time from contracts with customer as the contracts may have a long duration, and the recognition of contract revenues and costs is subject to management judgement which may be complex. Furthermore, management’s judgement affects several significant financial statement line items and thus has a pervasive effect on the financial statements. The accounting principles and notes 1 and 13 to the financial statements include further information on the Group’s recognition of revenue over time from contracts with customers. We obtained a sample of contracts and assessed the accounting treatment against the Group’s accounting principles and IFRS 15 Revenue from contracts with customers. We found that the accounting treatment was consistent with the content of the contracts and that accounting principles were based on IFRS 15. Through meetings with management and project leaders, including review of relevant documentation, we tested whether the Group had implemented controls to ensure that accounting for revenue over time reflects management’s best estimates with respect to total contract revenue, cost, and if applicable, stage of completion. We found that controls had been implemented at various levels of the organization, and that the controls included periodic meetings to review open contracts. Estimating project revenue and associated costs, and, if applicable, calculating stage of completion requires exercise of judgement. We performed various procedures to assess whether management’s judgements were reasonable, including:  Interviewed project leaders and management challenging judgements made with respect to project estimates.  Compared expenses and hours incurred to budgeted expenses and hours.  Compared actual outcome on completed projects against initial budget.  If applicable, assessed whether stage of completion on open projects corresponded to amounts recognized in the financial statements. We found that assumptions used, and judgements made by management were reasonable. We further evaluated the information disclosed in notes 1 and 13 and found it to be appropriate and adequate. 196 197 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Report on the Audit of the Financial Statements Report on the Audit of the Financial Statements 5 / 6 As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:  identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. We design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's and the Group's internal control.  evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.  conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's and the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company and the Group to cease to continue as a going concern.  evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves a true and fair view.  obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 4 / 6 related to the detailed bookkeeping, presentation and disclosure of the transactions. Note 3 to the financial statements include information on discontinued operations. measurement of the retained investment as an associate. We evaluated presentation of the transactions across the primary statements, as well as the information disclosed in note 3, and found it to be appropriate and adequate. Other Information The Board of Directors and the Managing Director (management) are responsible for the information in the Board of Directors’ report and the other information accompanying the financial statements. The other information comprises information in the annual report but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the information in the Board of Directors’ report nor the other information accompanying the financial statements. In connection with our audit of the financial statements, our responsibility is to read the Board of Directors’ report and the other information accompanying the financial statements. The purpose is to consider if there is material inconsistency between the Board of Directors’ report and the other information accompanying the financial statements and the financial statements or our knowledge obtained in the audit, or whether the Board of Directors’ report and the other information accompanying the financial statements otherwise appears to be materially misstated. We are required to report if there is a material misstatement in the Board of Directors’ report or the other information accompanying the financial statements. We have nothing to report in this regard. Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report  is consistent with the financial statements and  contains the information required by applicable statutory requirements. Our opinion on the Board of Directors' report applies correspondingly to the statement on Corporate Governance. Our opinion on whether the Board of Directors’ report contains the information required by applicable statutory requirements, does not cover the Sustainability Statement, on which a separate assurance report is issued. Responsibilities of Management for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 198 199 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE Independent Sustainability Auditor’s Limited Assurance Report Report on the Audit of the Financial Statements PricewaterhouseCoopers AS, Kystveien 14, NO-4841 Arendal T: 02316, org. no.: 987 009 713 MVA, www.pwc.no Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap To the General Meeting of Arendals Fossekompani ASA Independent Sustainability Auditor’s Limited Assurance Report Limited Assurance Conclusion We have conducted a limited assurance engagement on the consolidated sustainability statement of Arendals Fossekompani ASA (the «Company») included in Sustainability Statement of the Board of Directors’ report (the «Sustainability Statement»), as at 31 December 2024 and for the year then ended. Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that the Sustainability Statement is not prepared, in all material respects, in accordance with the Norwegian Accounting Act section 2-3, including: • compliance with the European Sustainability Reporting Standards (ESRS), including that the process carried out by the Company to identify the information reported in the Sustainability Statement (the «Process») is in accordance with the description set out in the subsections "IRO-1 Description of the process to identify and assess material impacts, risks and opportunities" and “The Process in 2024” within the General Information chapter; and • compliance of the disclosures in the section "EU Taxonomy" of the Sustainability Statement with Article 8 of EU Regulation 2020/852 (the «Taxonomy Regulation»). Basis for Conclusion We conducted our limited assurance engagement in accordance with International Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance engagements other than audits or reviews of historical financial information («ISAE 3000 (Revised)»), issued by the International Auditing and Assurance Standards Board. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. Our responsibilities under this standard are further described in the Sustainability Auditor’s Responsibilities section of our report. Our Independence and Quality Management We have complied with the independence and other ethical requirements as required by relevant laws and regulations in Norway and the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. The firm applies International Standard on Quality Management 1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Other Matter The comparative information included in the Sustainability Statement was not subject to an assurance engagement. Our conclusion is not modified in respect of this matter. Responsibilities for the Sustainability Statement The Board of Directors and the Managing Director (Management) are responsible for designing and implementing a process to identify the information reported in the Sustainability Statement in accordance with the ESRS and for disclosing this Process in the subsections "IRO-1 Description of the process to 6 / 6 Report on Other Legal and Regulatory Requirements Report on Compliance with Requirement on European Single Electronic Format (ESEF) Opinion As part of the audit of the financial statements of Arendals Fossekompani ASA, we have performed an assurance engagement to obtain reasonable assurance about whether the financial statements included in the annual report, with the file name AFK Annual Report 2024.zip, have been prepared, in all material respects, in compliance with the requirements of the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the preparation of the annual report in XHTML format, and iXBRL tagging of the consolidated financial statements. In our opinion, the financial statements, included in the annual report, have been prepared, in all material respects, in compliance with the ESEF regulation. Management’s Responsibilities Management is responsible for the preparation of the annual report in compliance with the ESEF regulation. This responsibility comprises an adequate process and such internal control as management determines is necessary. Auditor’s Responsibilities For a description of the auditor’s responsibilities when performing an assurance engagement of the ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninger Arendal, 10 April 2025 PricewaterhouseCoopers AS Fredrik Botha State Authorised Public Accountant 200 201 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE 3 / 4 • Designing and performing procedures to evaluate whether the Process is consistent with the Company’s description of its Process set out in the subsections "IRO-1 Description of the process to identify and assess material impacts, risks and opportunities" and “The Process in 2024” within the General Information chapter. Our other responsibilities in respect of the Sustainability Statement include: • Identifying where material misstatements are likely to arise, whether due to fraud or error; and • Designing and performing procedures responsive to where material misstatements are likely to arise in the Sustainability Statement. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Summary of the Work Performed A limited assurance engagement involves performing procedures to obtain evidence about the Sustainability Statement. The procedures in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. The nature, timing and extent of procedures selected depend on professional judgement, including the identification of disclosures where material misstatements are likely to arise in the Sustainability Statement, whether due to fraud or error. In conducting our limited assurance engagement, with respect to the Process, we: • Obtained an understanding of the Process by: o performing inquiries to understand the sources of the information used by management (e.g., stakeholder engagement, business plans and strategy documents); and o reviewing the Company’s internal documentation of its Process; and • Evaluated whether the evidence obtained from our procedures with respect to the Process implemented by the Company was consistent with the description of the Process set out in the subsections "IRO-1 Description of the process to identify and assess material impacts, risks and opportunities" and “The Process in 2024” within the General Information chapter. In conducting our limited assurance engagement, with respect to the Sustainability Statement, we: • Obtained an understanding of the Group’s reporting processes relevant to the preparation of its Sustainability Statement by: o Obtaining an understanding of the Group’s control environment, processes, control activities and information system relevant to the preparation of the Sustainability Statement, but not for the purpose of providing a conclusion on the effectiveness of the Group’s internal control; and o Obtaining an understanding of the Group’s risk assessment process; • Evaluated whether the information identified by the Process is included in the Sustainability Statement; • Evaluated whether the structure and the presentation of the Sustainability Statement is in accordance with the ESRS; 2 / 4 identify and assess material impacts, risks and opportunities" and “The Process in 2024” within the General Information chapter of the Sustainability Statement. This responsibility includes: • understanding the context in which the Group's activities and business relationships take place and developing an understanding of its affected stakeholders; • the identification of the actual and potential impacts (both negative and positive) related to sustainability matters, as well as risks and opportunities that affect, or could reasonably be expected to affect, the Group’s financial position, financial performance, cash flows, access to finance or cost of capital over the short-, medium-, or long-term; • the assessment of the materiality of the identified impacts, risks and opportunities related to sustainability matters by selecting and applying appropriate thresholds; and • making assumptions that are reasonable in the circumstances. Management is further responsible for the preparation of the Sustainability Statement, in accordance with the Norwegian Accounting Act section 2-3, including: • compliance with the ESRS; • preparing the disclosures in the section "EU Taxonomy" of the Sustainability Statement, in compliance with the Taxonomy Regulation; • designing, implementing and maintaining such internal control that Management determines is necessary to enable the preparation of the Sustainability Statement that is free from material misstatement, whether due to fraud or error; and • the selection and application of appropriate sustainability reporting methods and making assumptions and estimates that are reasonable in the circumstances. Inherent limitations in preparing the Sustainability Statement In reporting forward-looking information in accordance with ESRS, Management is required to prepare the forward-looking information on the basis of disclosed assumptions about events that may occur in the future and possible future actions by the Group. Actual outcomes are likely to be different since anticipated events frequently do not occur as expected. Sustainability Auditor’s Responsibilities Our responsibility is to plan and perform the assurance engagement to obtain limited assurance about whether the Sustainability Statement is free from material misstatement, whether due to fraud or error, and to issue a limited assurance report that includes our conclusion. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence decisions of users taken on the basis of the Sustainability Statement as a whole. As part of a limited assurance engagement in accordance with ISAE 3000 (Revised) we exercise professional judgement and maintain professional scepticism throughout the engagement. Our responsibilities in respect of the Sustainability Statement, in relation to the Process, include: • Obtaining an understanding of the Process, but not for the purpose of providing a conclusion on the effectiveness of the Process, including the outcome of the Process; • Considering whether the information identified addresses the applicable disclosure requirements of the ESRS; and Independent Sustainability Auditor’s Limited Assurance Report Independent Sustainability Auditor’s Limited Assurance Report 202 203 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE 4 / 4 • Performed inquiries of relevant personnel and analytical procedures on selected information in the Sustainability Statement; • Performed substantive assurance procedures on selected information in the Sustainability Statement; • Where applicable, compared disclosures in the Sustainability Statement with the corresponding disclosures in the financial statements and other sections of the Board of Directors’ report; • Evaluated the methods, assumptions and data for developing estimates and forward-looking information; • Obtained an understanding of the Company’s process to identify taxonomy-eligible and taxonomy- aligned economic activities and the corresponding disclosures in the Sustainability Statement; • Evaluated whether information about the identified taxonomy-eligible and taxonomy-aligned economic activities is included in the Sustainability Statement; and • Performed inquiries of relevant personnel, analytical procedures and substantive procedures on selected taxonomy disclosures included in the Sustainability Statement. Arendal, 10 April 2025 PricewaterhouseCoopers AS Hanne Sælemyr Johansen State Authorised Public Accountant – Sustainability Auditor Independent Sustainability Auditor’s Limited Assurance Report 204 205 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE List of abbreviations AC Audit Committee AFK Arendals Fossekompani AM Additive Manufacturing AMGTA Additive Manufacturer Green Trade Association ARP Activity and Reporting Obligations ARR Annual Recurring Revenue BCoC Business Partner Code of Conduct BOD Board of Directors CAD Cash Available for Distribution CSRD Corporate Sustainability Reporting Directive CDP Carbon Disclosure Project CapEx Capital Expenditure CEO Chief Executive Ofﬁcer CFO Chief Financial Ofﬁcer CoC Code of conduct CSO Chief Sustainability Ofﬁcer CSR Corporate Social Responsibility DCF Discounted Cash Flow DNSH Do No Signiﬁcant Harm EAT Earning after tax EBT Earnings before tax EBIT Earnings before interest and taxes EBITDA Earnings Before Interest, Taxes Depreciation, and Amortization EU European union ERP Enterprise Resource Planning ESG Environmental, Social and Governance GHG Greenhouse Gas GRI Global Reporting Initiative GWh Gigawatt hours HR Human Resources HSE Health, Safety, and Environment HSSE Health, Safety, Security and Environment IFRS International Financial Reporting Standards ICT Information and Communication Technologies IEA International Energy Agency ILO Declaration of the International Labour Organisation inp Interestbearing current borrowings IoT Internet of Things IR Injury Rate ISO International Organisation for Standardisation KPI Key Performance Indicator kWh Kilowatt hours LCA Life Cycle Assessment LEO Low Earth Orbit LTIR Lost Time Incident Rate MACD Moving Average Convergence Divergence MAR Market Abuse Regulation M&A Mergers and Acquisitions MoD Ministry of Defense MoU Memorandum of Understanding MWh Megawatt hours NAA Norwegian Accounting Act NGO Non Governmental Organisation NHO Confederation of Norwegian Enterprises NVE The Norwegian Water Resources and Energy Directorate OCI Other Comprehensive Income OECD The Organisation for Co-operation and Development OHS Occupational Health and Safety OpEx Operating Expenditure R&D Research and Development SaaS Software-as-a-Service SASB Sustainability Accounting Standards Board SBTi Science Based Target initiative SCoC Supplier Code of Conduct SDG Sustainable Development Goal SQM Square meter TCFD Task Force on Climate-related Financial Disclosures TRIR Total Recordable Incident Rate TSC Technical Screening Criteria UN United Nations WACC Weighted Average Cost of Capital 206 207 ARENDALS FOSSEKOMPANI ANNUAL REPORT 2024 INTRODUCTION ABOUT PERFORMANCE FINANCIAL SIGNATURES SUSTAINABILITY CORPORATE GOVERNANCE VISITING ADDRESS Langbryggen 9 4841 Arenda l POSTAL ADDRESS Box 280 4803 Arendal +47 37 23 44 00 ﬁ[email protected] arendalsfossekompani.no © ARENDALS FOSSEKOMPANI ASA. ALL RIGHTS RESERVED.

AI Terminal

More from Arendals Fossekompani

Talk to a Data Expert