GENERATIONS

FOR GENERATIONS

GENERATIONS

GENERATIONS FOR

Arendals Fossekompani Integrated Report 2022 Annual and Sustainability Report

For generations, Arendals Fossekompani has provided people and communities with clean energy and inspiration. Established in 1896 to harness the energy from an everlasting resource, water – we have utilized the benefits of this resource to build and develop high-tech companies. What started as a local producer of hydropower, has transformed into a global industrial investor.

While running water continues to power our business, we search for, invest in, and support companies that have the potential to make a difference. To enable the transition to a more sustainable future we offer human and financial resources to renew and advance industries. Our competence is particularly strong in areas such as renewable energy, electrification, materials, digitalization, and big data analytics.

We are a proud builder and supporter of technology that impacts the world. That is our legacy, our history, our future. It is what we have done, and what we'll continue to do.

For generations.

GENERATIONS

FOR GENERATIONS

Financial and Sustainability Highlights 2022

Record-high electricity prices, increased hydropower tax

The average price of electricity in the NO2 spot market reached record-high levels. An increased tax burden on Norwegian hydropower producers reduced net profit for the year.

NOK 7.55 1.9% of market cap paid as dividend

In addition to quarterly cash dividends of NOK 3.75 per share, Arendals Fossekompani paid extraordinary dividend totaling NOK 3.80 per share, as dividend in kind.

SaaS growth continues

Volue reported revenue growth in all segments in 2022. Total revenues grew by 17% to NOK 1.2 billion compared with 2021, while SaaS revenues grew by 28%.

A global player within induction heating and wireless charging

Following the acquisition of wireless charging solutions provider IPT Technology, ENRX (formerly known as Evolgy) was established to combine IPT Technology (Charge) with EFD Induction (Heat). ENRX saw high order intake during 2022 and an all-time-high order backlog at year-end.

64%

Strong increase in Tekna backlog

Tekna saw a 64% increase in its backlog at year-end compared to 2021. The Tekna share made the transition to Oslo Børs, the main list of the Oslo Stock Exchange on 1 July 2022.

Establishing energy storage company

Following the acquisition of the German energy storage specialist Commeo in Q2, AFK established Ampwell to build an eco-system for battery technology and Batteryas-a-Service business model.

Sustainability linked loan facilities

Renewal of loan facilities totaling NOK 1.8 billion was finalized in June. As part of the new terms, Arendals Fossekompani will be rewarded for its performance related to a selection of sustainability targets.

Certified as Equal Workplace

Following a thorough evaluation of how equality and diversity are implemented in the company strategy, Arendals Fossekompani was certified as an Equal Workplace in 2022.

Science Based Targets

We have in 2022 submitted science based emission reduction targets in line with the Science Based Target initiative criteria and recommendation. We are committed to reducing absolute Scope 1 and Scope 2 greenhouse gas emissions by 42% by 2030.

Reduced greenhouse gas emissions

Continuous focus on sustainability resulted in reduction of our total Scope 1 and Scope 2 emissions from 4,404 tCO2 e in 2021 to 4,061 tCO2 e in 2022.

Content

01	Arendals Fossekompani	8
	CEO Statement	10
	Arendals Fossekompani in the World	12
	Who We Are	14
	Value Creation for Generations	16
	Arendals Fossekompani Group	18
	Group Managment	24
	Shareholder Information	28
	Reporting 100 Years Ago	32
02	Portfolio	34
	Assets	36
	Green Energy
	AFK Vannkraft	38
	Ampwell	42
	Vergia	46
	Digitalization & Big Data Analytics
	NSSLGlobal	50
	Volue	54
	Alytic	58
	Electrification & Materials
	Tekna	62
	ENRX	66
	Property
	AFK Property	70
03	From the Boardroom	74
	Board of Directors	76
	Board of Directors' Report	78

Corporate Governance Report 84

04	Sustainability	98
	Integrity	100
	Reporting Frameworks	100
	EU Taxonomy Summary	102
	Stakeholder Dialogue and Materiality Analysis	105
	Sustainability Priorities	106
	Updated Materiality Assessment	106
	Strategic Focus Areas and Material Topics	107
	Membership Associations	108
	Ethical Business Conduct	109
	Responsible Investments	115
	Optimizing the Portfolio Companies	118
	A Great Place to Work	122
	Community Engagement	135
	Ambitions and Targets for 2023	138

Financia
Annual Acco
Declaration
Independen

$\sim$ p p $\sim$ $\sim$ $\sim$ $\sim$
GRI Content
Independent
List of Abbre
Additional R
$\Delta$ ct

Integrity	100
Reporting Frameworks	100
EU Taxonomy Summary	102
Stakeholder Dialogue and Materiality Analysis	105
Sustainability Priorities	106
Updated Materiality Assessment	106
Strategic Focus Areas and Material Topics	107
Membership Associations	108
Ethical Business Conduct	109
Responsible Investments	115
Optimizing the Portfolio Companies	118
A Great Place to Work	122
Community Engagement	135
Ambitions and Targets for 2023	138

05 Financial Statements 142

Annual Accounts and Notes in Full	144
Declaration by the Members of the Board and the CEO	228
Independent Auditor's Report	230

06 Appendix 236 GRI Content Index 238 Independent Auditor's Statement 246 List of Abbreviations 248 Additional Reports 250

Activity and Reporting Obligations Report 2022

Carbon Accounting Report 2022

EU Taxonomy Report 2022

Human Rights and Transparency Act Report 2022

Remuneration Report 2022

TCFD: Climate-Risk Assessment Report 2022

About This Report 251

CEO Statement	10
Arendals Fossekompani in the World	12
Who We Are	14
Value Creation for Generations	16
Arendals Fossekompani Group	18
Group Management	24
Shareholder Information	28
Reporting 100 Years Ago	32

01 Arendals Fossekompani

Building a 2030 compliant, high value portfolio

Arendals Fossekompani is further developing an advanced technology and industry portfolio that is positioned in high-growth global megatrends and aligned with global sustainable development goals for 2030.

Lars Peder Fensli, Interim CEO

Based on more than a century of renewable energy production, Arendals Fossekompani has a broad and well-diversified portfolio with a strong sustainability profile. Major investments are in hydro, wind and solar power, software for management of renewable energy, battery technology, optimisation of resources, electrification, mobile communication solutions, and additive manufacturing. All our businesses are well positioned in global megatrends, and they have strong organisations and valuable customer bases. Our portfolio is very exciting, and we believe it has a strong potential for value enhancement towards 2030 and beyond.

POSITIONING THE PORTFOLIO, BUILDING NEW BUSINESSES

In a busy 2022, Arendals Fossekompani completed various structural and strategic actions, including the acquisition of energy storage specialist Commeo and induction

charging expert IPT Technology.

With the acquisition of Commeo, Arendals Fossekompani established the company Ampwell, which will combine hardware from Commeo with technology from start-up Cellect Energy, to build an eco-system for battery technology and a Battery-as-a-Service business model.

IPT Technology was grouped with EFD Induction in a company called Evolgy, now rebranded as ENRX. ENRX combines EFD Induction's global market leadership in industrial induction heating systems (Heat) with IPT Technology's leading technology in the high growth market for wireless induction charging solutions for mobility and

industrial applications (Charge).

A third acquisition, Factlines, was made through our portfolio company Alytic. Offering a digital solution, Factlines makes supply chain mapping efficient, supporting the process from requirements and code of conduct – to risk analysis, follow-up,

and dialogue.

CREATING LONG-TERM VALUE

Today, our portfolio companies have approximately 2,400 employees in 25 countries. The most important tasks for the AFK Group are to continue to create lasting value for our shareholders, our employees and society at large and to exercise good corporate governance of our portfolio companies.

AFK Group has a decentralised management model. The management and boards of our portfolio companies have the main responsibility for shaping the development of their companies. The Group is always represented on the boards and contributes with strategic direction, financial strength, a genuine interest in their businesses, and a network that strengthens the position of both the Group and the companies.

SUSTAINABILITY AND SOCIAL RESPONSIBILITY

Our portfolio of companies has a clear green profile and contributes in several ways to the UN Sustainable Development Goals. Sustainability and corporate social responsibility are important drivers of future value creation, in the form of requirements from customers, increased access to talent, increased access to capital and increased interest in our share.

We are committed to the climate targets in the Paris Agreement. We are a UN Global Compact member and continue to support its principles for responsible business policies for human rights, labour, environment and anti-corruption.

Arendals Fossekompani has a strong organisation with highly skilled and dedicated people. We also have a substantial financial capacity, and a global customer base which we will continue to serve in the best possible manner. The outlook for our companies is good, and we have identified clear opportunities to strengthen and build our position in selected segments and markets.

Arendals Fossekompani in the world

NUMBER OF EMPLOYEES BY COUNTRY
--------------------------------

Norway	745	USA	89	Thailand	12	Israel	5
Germany	359	Romania	80	Malaysia	8	Spain	5
India	229	France	72	Japan	7	South Korea 2
China	192	Denmark	65	Italy	6	Austria	1
Canada	179	Sweden	59	Netherlands	6
United Kingdom	155	Switzerland	22	Singapore	6
Poland	126	Brazil	16	Finland	5

Arendals Fossekompani Parent Company

(AFK Group Management, AFK Vannkraft), AFK Property

Head office Arendal, Norway

Employees 38
Countries Norway
Vergia Employees 3 Countries Norway
Ampwell Employees 60 Countries Norway, Germany
Alytic Employees 86
Countries Norway, Germany, Netherlands
Volue Employees 778
Countries
NSSLGlobal Employees 223
Countries
Tekna Employees 216 Countries

Head office Oslo, Norway

Norway, Germany, Poland, Denmark, Sweden, Switzerland, Finland, Japan, Spain

Head office London, UK

United Kingdom, Germany, Norway, Denmark, Singapore, Israel, Netherlands, Poland, USA, Sweden

Head office Sherbrooke, Canada

Canada, France, China, South Korea

ENRX

Employees 1,047 Countries

Head office Skien, Norway

India, China, Norway, Germany, USA, Romania, France, United Kingdom, Poland, Brazil, Thailand, Malaysia, Italy, Japan, Sweden, Spain, Austria

Who we are

Arendals Fossekompani is an industrial investment company that combines industrial, technological, and capital markets expertise to identify and develop opportunities for value creation. We have an attractive portfolio positioned in verticals driven by global megatrends. Our portfolio companies have 2,400 employees in 25 countries. Established in 1896 to harness the energy from an everlasting natural resource; water, Arendals Fossekompani is still a proud producer of hydropower. In addition, we operate globally in many forward-looking industries including 3D printing, algo trading, satellite services, battery and solar technology, software and digitalisation, as well as various green energy technologies.

with the world around us and our partners. history, we continue to develop our companies in a sustainable and long-term perspective.

motivation to carry out our ambitions.

in all situations. We develop our companies in a sustainable manner.

Our mission

Arendals Fossekompani shall create lasting value for its stakeholders through longterm and active development of the companies we own. We invest in and own companies that make energy from renewable sources more usable and accessible, and that contribute to a more sustainable use of resources. Based on our industrial and financial expertise, we also invest in technology and energy companies that enable

the green transition.

Arendals Fossekompani is a proud builder and supporter of technology that impacts the world. That is our legacy, our history, our future. It is what we have done, and what we'll continue to do. For generations.

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 gradually built a substantial financial capacity. At the end of the 1960s, the company changed it's 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 in the Nordic and European wholesale electricity market.

independent provider of services

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, since the early 2000's up until today, have contributed to today's portfolio of companies within forward-looking industries such as Green Energy, Technology, Electrification, Materials and Property.

Consolidated revenues increased from around NOK 250 million in 2004 to nearly NOK 4,600 million in 2022.

In 2022, hydropower accounted for approximately thirteen percent of consolidated revenues.

Arendals Fossekompani Group

Arendals Fossekompani is an industrial investment company holding nine core investments and a portfolio of financial investments. These operations employ 2,400 people in 25 countries.

	2022	2021	2020
Total revenue	4,587	4,232	3,157
EBITDA	726	686	401
Operating profit (EBIT)	429	450	161
Operating margin	9%	11%	5%
Earnings before tax (EBT)	426	332	99
Earnings after tax (EAT)	-33	97	66
Operating cash flow	483	857	135
NIBD	-1,208	-1,805	-580
Equity	3,784	3,909	3,856
Equity ratio	48%	57%	55%

Environment Scope 1 GHG (tCO2 Scope 2 GHG (location-based) (tCO2 Scope 3 GHG (tCO2

	2022	2021	2020
Scope 1 GHG (tCO2 e)	1,614	1,581	6561
Scope 2 GHG (location-based) (tCO2 e)	2,447	2,823	238
Scope 3 GHG (tCO2 e)	3,394	1,276	175
Energy consumption (MWh)	25,859	24,449	10,336
Lost time injury rate	1.0	0.8	-
Sick leave	3.0%	-	-
Absentee rate	3.0%	1.5%	2.9%
Turn-over rate	16%	7.6%	4.5%
Women in Board of Directors	28%	30%	13%
CoC signed	78%	87%	87%
No of reported incidents/breach of CoC/SCoC	2	-	-
Operations assessed for corruption risks	69%	100%	-
Training in CoC and Whistleblower policy	45%	87%	-

Former portfolio company, Cogen, is not included. ENRX did not report GHG emissions in 2020.

Head office

Arendal, Norway Chair

Trond Westlie

Chief Executive Officer Lars Peder Fensli

Employees 2,400 Countries

Arendals Fossekompani (AFK) has proud traditions in power production and owns and operates two hydropower plants. In addition, Arendals Fossekompani operates globally in many forward-looking industries including 3D printing, algo trading, satellite services, battery and solar technology, software, and digitalisation, as well as various green energy technologies.

2022 IN BRIEF

(Figures in parentheses refer to the same period the previous year)

In 2022, Arendals Fossekompani reported consolidated revenues of NOK 4,587 mil lion (4,232 million) and operating profit of NOK 429 million (450 million). Ordinary profit after tax amounted to NOK -33 million (97 million), of which the AFK sharehold ers' share of the profit was NOK 6 million (107 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 12 million (160 million).

The Arendals Fossekompani's financial position remains solid. The cash position as at 31 December amounted to NOK 1,160 million. In addition, the company has undrawn credit facilities of NOK 1,947 million, securing net available liquidity of NOK 3,107 million at year-end.

Consolidated revenues in 2022 increased by 8% year-on-year. Adjusted for AFK Property's revenue recognition of the first phase of the development project Bryggebyen in 2021, consolidated revenues grew by 23% in 2022, compared to 2021. 2022 was marked by high electricity prices and high activity levels in the portfolio companies. AFK also completed two strategic transactions during 2022, including the acquisition of energy storage specialist Commeo, forming the basis for establish ing the energy storage company Ampwell, as well as the acquisition of the induction charging company IPT Technology, which was merged with EFD Induction, forming ENRX Group.

Volue

Volue continues the transformation towards recurring revenues and Software-as-a-Service (SaaS), with SaaS revenues growing by 28% from 2021 to 2022. Growth was particularly strong within the Energy segment, driven by volatile power markets and high demand for forecast, analytics, and trading services. The SaaS transformation builds a platform that can handle a large number of new customers, enabling further revenue growth. Recurring revenue constituted 63% of total revenues and reached NOK 765 million in 2022, an increase of 15% compared to 2021. Strategic contracts won within all segments during the year confirms Volue's capabilities and position in the market.

Tekna

Tekna reported operating revenues of CAD 26.9 million in 2022, in line with 2021. The order backlog as per year-end saw a 64% increase from 2021, reflecting grow ing demand for additive materials and strong pipeline of systems projects. Tekna initiated a machine capacity increase program during 2022 to meet the demand from additive manufacturing, targeting 70% capacity increase. Steps were taken during the year to improve profitability and cash position. Tekna uplisted to Oslo Børs during 2022.

ENRX

ENRX (previously Evolgy) was formed through the combination of induction heating company EFD Induction and the wireless charging solutions provider IPT Technology, the latter acquired during 2022. ENRX combines EFD Induction's global market lead ership in industrial induction heating systems (Heat) with IPT's leading technology in the high-growth market for wireless induction charging solutions for mobility and industrial applications (Charge). Total operating revenues increased by 15% to EUR 132 million in 2022, driven by both higher activity level within the Heat segments, as well as a smaller revenue contribution from the Charge segment. Order intake in 2022 amounted to EUR 157 million as at 31 December, corresponding to a 22% increase year-over-year. The backlog at year-end was at an all-time high.

NSSLGlobal

NSSLGlobal reported continued strong revenue growth of 13% and profitability increase during 2022, with airtime revenues and expansion of maritime and gov ernment project work as main drivers. NSSLGlobal experienced healthy sales throughout the year, including new VSAT leasing orders, governmental and maritime engineering orders, as well as defense contracts across Europe. The company's longterm backlog provides a stable outlook going forward.

Alytic

Alytic continued the development of its portfolio of data- and technology-driven companies during 2022. Highlights for the year included the launch of Kontali's new seafood analytics portal Edge and expansive investments in Greenfact to position the company as a global provider of market data analytics and insight withing green certificates and carbon markets. In addition, Alytic established itself in the ESG ser vices vertical through the acquisition of Factlines.

AFK Vannkraft

AFK Vannkraft (Hydropower) contributed with substantial revenues and operating profit in 2022 due to significant uplift in electricity prices. The average spot price in the NO2 price area was EUR 211/MWh (71/MWh) in 2022 while production reached 351 GWh (517 GWh). Operating revenues for the year reached NOK 606 million (373 million) with an operating profit of NOK 537 million (300 million). Earnings after tax amounted to NOK 156 million (170 million), including a NOK 75 million incremental tax provision from changes in the tax regime for Norwegian hydropower producers

implemented during 2022.

SUSTAINABILITY reporting.

For the first time, our Annual Report is compliant with the Global Reporting Initiative (GRI). The GRI standards are the most widely used standards for sustainability

Total Scope 1 emissions for Arendals Fossekompani as a group was 1,614 tCO 2 e in 2022, up from 1,581 in 2021. Scope 2 emissions decreased to 2,447 tCO 2 e (2,823), while the energy consumption increased slightly. Scope 3 emissions increased to 3,394 tCO 2 e (1,276), mainly because all portfolio companies began reporting waste in 2022.

In 2022, the AFK Group did an assessment of the Group's activities against the EU taxonomy. 58% of the Group's turnover is eligible with the EU Taxonomy. An align ment of 22% shows that the Group contributes positively. Our investment strategy has resulted in 69% eligibility and 25% alignment of the Group's CapEx. For OpEx, the numbers are 50% eligibility and 14% alignment. The OpEx KPI are based on our reporting on both turnover and CapEx, as no activities have been identified solely

for OpEx.

The lost time injury rate was 1.0 in 2022, a slight increase from 0.8 in 2021. The absentee rate increased to 3.0% (1.5%). The Women in Board of Directors rate decreased slightly because of some start-up portfolio companies which have not yet established

a Board of Directors.

The share of employees that has signed the Code of Conduct decreased to 78%, mainly due to new acquisitions and newly established companies, especially the acquisitions of Commeo and IPT Technology.

EVENTS AFTER THE CLOSE OF THE YEAR

On 16 December 2022, it was announced that Ørjan Svanevik would resign as CEO of Arendals Fossekompani, and CFO Lars Peder Fensli would function as interim CEO as of 1 January 2023 until a new CEO was appointed. On 10 January 2023, it was announced that Benjamin Kristoffer Golding was appointed new CEO of Arendals Fossekompani. Golding will assume his position at Arendals Fossekompani as soon as his job at DNB comes to an end, but no later than 1 August 2023.

On 11 April 2023, Arendals Fossekompani and Tekna signed a loan facility agreement totaling MCAD 25 to finance operations and further growth in Tekna. The facility will be made available in three tranches (MCAD 5+10+10).

On 9 February 2023, the Board of Directors decided to pay an ordinary cash divi dend of NOK 0.95 per share for the fourth quarter 2022. The dividend was paid on 22 February.

On 8 March 2023, the construction of Kilandsfoss Hydropower Plant began. When finalized in 2025, Kilandsfoss will produce approximately 38 GWh. Project partners are the municipalities of Froland and Åmli, each with one-third ownership.

OUTLOOK

There is ongoing uncertainty associated with the war in Ukraine, the tax regime for the hydropower industry, supply chain constraints, soaring inflation, rising interest rates, as well as the development of energy prices. In this unpredictable environment, Arendals Fossekompani's solid financial position enables continued support of the portfolio companies, both in handling short-term challenges but also in continued investments to strengthen their long-term competitiveness.

In light of the market's estimated power price trend for 2023 and forecasted produc tion, the revenues and operating profit for AFK Hydropower are expected to be lower than the all-time-high in 2022.

Following high activity levels in all portfolio companies, somewhat offset by lower power price expectations, 2023 revenues are expected to be on par with 2022. Operating profit is expected to be lower than 2022.

Our main sustainability target for 2023 is to ensure that our governance is in accor dance with the OECD Guidelines for Multinational Enterprises and NUES. AFK will apply to become a member of Princibles for Responsible Investments (PRI).

In Norway, 2023 marks the first year of mandatory reporting on the EU Taxonomy. During the 2022 assessment, we identified areas of improvement, and these will be included in the strategy for 2023. Our focus will be on documentation and scope of alignment assessments. As a part of our Science Based Target project, we have committed and submitted science-based emission reduction targets for AFK Parent Company and AFK Hydropower. The targets will be validated by the Science Based Target initiative (SBTi) in 2023. Portfolio companies must set their own targets within five years. We will also commit to setting net-zero targets to align with the ambitious goals in the Paris Agreement, which means to reduce emissions to limit global warm ing to 1.5 °C by 2050.

We aim to reach the goal of 40% female members on our Board of Directors in 2023. In addition, we aim to have 40% women in C-suite positions by 2027.

SHARE PRICE

There is a total of 55,995,250 shares in the company. The share price on 31 December 2022 was NOK 250.5, compared to NOK 445 on 31 December 2021, corresponding to a decrease of -43.7%. When including direct yield (dividend payouts) in the same period, total decrease in shareholder value was -42.0%.

Arendals Fossekompani's total market capitalization was NOK 14.0 billion at yearend. Compounded annual return to AFK shareholders was 18.0% (29.5% including dividends) in the period December 2012 to December 2022.

Group Management

	2022	2021	2020
Revenue and other income	23	9	7
EBITDA	-82	-60	-52
Operating profit (EBIT)	-86	-63	-53
Operating margin	-	-	-
Earnings before tax (EBT)	461	1,283	504
Provision for income tax	5	30	-15
Earnings after tax (EAT)	456	1,253	519
Operating cash flow	-539	310	-3,237
NIBD	-1,279	-950	-400
Equity	2,228	1,772	519

SUSTAINABILITY KPIs		2022	2021	2020
Environment	Scope 1 GHG (tCO2 e)	0	0	0
	Scope 2 GHG (Location based) (tCO2 e)	0.3	0.3	0.6
	Scope 3 GHG (tCO2 e)	34	46	22
	Energy consumption (MWh)	32	33.7	32.9
Social	Lost time injury rate	0	0	0
	Sick leave	1.3%	-	-
	Absentee rate	1.4%	0.8%	0%
	Turn-over rate	5%	0%	0%
	Women in Board of Directors	43%	43%	43%
Governance	CoC signed	100%	100%	100%
	No of reported incidents/breach of CoC/SCoC	0	-	-
	Operations assessed for corruption risks	100%	100%	-
	Training in CoC and Whistleblower policy	100%	76%	-
	Equity ratio	74%	75%	43%

Head office

Arendal, Norway

Chair Trond Westlie

Chief Executive Officer Lars Peder Fensli

Employees 21

Countries

Arendals Fossekompani Group Management employs 21 people at the head office in Arendal. The team focuses on the development of new sustainable business opportunities, active ownership of portfolio companies, hydropower generation, property projects, and management of financial investments.

Combining industrial, technological, and capital markets expertise, Group Management identifies and develops opportunities for value creation. As an active owner of our portfolio companies, we drive strategy developments, financing, restructuring and transactions, to ensure long-term sustainable value creation.

Arendals Fossekompani has an attractive portfolio positioned in verticals driven by global megatrends, such as Green Energy, Digitalisation & Big Data Analytics, and Electrification & Materials. Our companies are both listed and privately own, and Arendals Fossekompani is – as part of our strategy – the majority owner.

2022 IN BRIEF

(Figures in parentheses refer to the same period the previous year)

In 2022, AFK Group Management reported revenues of NOK 22 million (9 million). Operating expences increased to NOK 105 million (69 million), mainly due to costs of several acquisition processes and increased number of employees. The oper ating profit was NOK -86 million (-63 million). Net profit for the year was NOK 456 million, mainly driven by dividend payments from portfolio companies and profit from transactions.

Arendals Fossekompani's financial position remains solid. The cash position as at 31 December amounted to NOK 1,160 million. In addition, the company has undrawn credit facilities of NOK 1,947 million, securing net available liquidity of NOK 3,107 million per year-end.

During 2022, we made two strategic investments through the acquisitions of IPT Technology and Commeo. Both companies have already proven to be highly relevant additions to our portfolio, expanding our offering in two attractive megatrends and utilizing and creating synergies within our portfolio.

On 7 April, Arendals Fossekompani acquired the German energy storage special ist Commeo GmbH and formed the new company Ampwell. With Commeo as a key building block, Ampwell will build an eco-system for battery technology and a Battery-as-a-Service business model.

On 19 May, the wireless charging solution provider IPT Technology GmbH was acquired, which led to the establishment of the Evolgy Group, which initially con sists of EFD Induction and IPT Technology (Evolgy changed its name to ENRX in March 2023).

In June, loan facilities totaling NOK 1.8 billion were renewed at improved terms and with links to sustainability targets. As such, Arendals Fossekompani is rewarded for its continuous sustainability work.

GHG emissions consist of Scope 2 and Scope 3. In 2022, Scope 2 was 0.3 tCO 2 and Scope 3 was 34 tCO 2 e. During 2022, we committed and set reduction targets in line with the criteria and recommendations of the Science Based Targets initiative (SBTi). This commitment includes reduction of absolute Scope 1 and Scope 2 GHG emissions with 42% by 2030 from a 2021 base year.

The absentee rate was 1.4% in 2022. The turn-over rate was 5.0% with one tem porary employee leaving the company, while there were 5 new hires. As in previous years, the rate of women in Board of Directors was 43%.

100% of employees have signed and received training in AFK's Code of Conduct. During 2022, a new Business partner Code of Conduct (BCoC) was developed. We have a whistleblowing channel, so that employees can report on unwanted situations anonymously. There were no reported incidents in the whistleblowing channel during 2022.

In 2022, the Transparency Act entered into force. To comply with this act, we have completed a project where we gathered information from all main suppliers. The goal of this assessment was to understand the most important risks in our value chain. The results are published in the separate report Human Rights and Transparancy Report. In addition, we have created a guideline for handling incoming requests for information, in accordance with the Transparency Act.

Arendals Fossekompani is committed to maintaining an open dialogue with its 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.

Shareholder Information

We work to create shareholder value in the form of dividends and share price growth over time. In accordance with the document Corporate Governance in Arendals Fossekompani (last revised on 30 March 2021), the company's dividend policy is defined as follows: "AFK's dividend policy is to pay dividends that reflect the company's long-term strategy, financial position and investment capacity. AFK's objective is to pay dividends that will provide shareholders with a competitive return over time."

DIVIDEND FOR 2022

Total dividends paid in 2022 amounted to NOK 409 million, corresponding to NOK 7.55 per share. In addition to quarterly cash dividends of NOK 3.75 per share, Arendals Fossekompani distributed a total of 11,300,000 shares in Tekna Holding ASA, equal to one share for every 5 shares held in Arendals Fossekompani and corresponding to NOK 3.80 per share, as dividend in kind. Total dividends paid was equivalent to 1.9% of the volume-weighted average share price in 2022.

SHARES AND SHARE CAPITAL

As at 31 December 2022, there were a total of 55,995,250 shares in the company, of which 1,118,319 were treasury shares (2.0% of the total number of outstanding shares). The three largest shareholders of Arendals Fossekompani are Ulfoss Invest AS (26.3%), Havfonn AS (26.0%) and Must Invest AS (25.2%).

There were 4,999 shareholders at year-end 2022, compared to 5,289 shareholders

at the end of 2021.

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 the Oslo Børs distribution service.

The annual report and other enclosures to the meeting notice are made available solely via the company's webpage and the Oslo Stock Exchange 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 and the Chief Financial Officer attend on behalf

of the management.

SHARE PRICE AND MARKET CAP

The price of shares in Arendals Fossekompani decreased by 43% in 2022 and closed at 250.5 at year-end, corresponding to a market capitalization of NOK 14 billion.

TRADING VOLUME

AFK trading volume was comparable to 2021, with a total of 3,430,618 shares traded in 2022, corresponding to 6.1% of all shares. Overall turnover from trading of the AFK share in 2022 was NOK 1,299 million, compared to NOK 1,114 million in 2021.

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 production, 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 opportunity to deny the 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 consent. Consent 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

Currently AFK Parent Company owns 2.1% treasury shares. At Arendals Fossekompani's Annual General Meeting on 5 May 2022, the Board of Directors was authorized to acquire treasury shares up to a maximum of 10%. In accordance with this authorization, 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 authorization will remain in effect until the Annual General Meeting in 2023.

In 2022, the company sold 44,306 shares to Executive Management in connection with the company's incentive program.

OPTION SCHEMES

As at 31 December 2022, Arendals Fossekompani had no option schemes.

INVESTOR RELATIONS

Arendals Fossekompani seeks to maintain an open dialogue 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 information are available at www.arendalsfossekompani.no. 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 following members: Stine Rolstad Brenna (Chair), Morten Bergesen and Anne Grethe Dalane.

KEY FIGURES FOR AFK SHARE (NOK)

	2022	2021	2020	2019	2018
Closing price 31/121	250.5	441	180	103	123
Annual growth (%)	-43	145	75	-17	24
High/Low2	471 / 214	503 / 175	195 / 82	137 / 86	167 / 98
Share price average2	322	302	127	112	134
Market cap 31/12 (million)	14,027	24,204	9,863	5,639	6,775
Dividend per share3	7.55	37.08	3.44	2.24	34.81
Dividend accumulated	105.72	98.17	61.09	57.65	55.41
Annual turnover (million)	1,299	1,113	282	79	94
Volume	3,430,618	3,472,586	1,979,993	738,500	673,425
Total shareholder return (%)	-41.5	166.0	78.3	-15.0	58.9

Numbers adjusted for share split effectuated in 2020
1. Based on closing price
1. Paid quarterly

Reporting 100 years ago

In 1922, production at Bøylefoss hydropower plant increased compared to the year before, but activity levels at the two major consumers at the time, Det Norske Nitridaktieselskap (producer of aluminum) and Arendal Smelteverk (producer of silicon carbide), was still below average. Only two of the three turbines at Bøylefoss were needed to produce enough energy to supply demand.

NOK 1,097,000

NET PROFIT

NOK 503,000

DIVIDEND PAID TO SHAREHOLDERS

NOK 288,000

Portfolio

02

Assets 36 Green Energy Digitalization & Big Data Analytics Electrification & Materials Property

AFK Vannkraft	38
Ampwell	42
Vergia	46

NSSLGlobal	50
Volue	54
Alytic	58

Tekna	62
ENRX	66

AFK Property	70

Digitalization & Big Data Analytics

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

AFK ownership 60% Market cap (31.12) Head office Oslo, Norway Listed at Oslo Børs

4,050 MNOK

AFK ownership 80%

Head office London, UK

AFK ownership 95%

Head office Arendal, Norway

Electrification & Materials

Anything that can be electric, will be electric. As a result, demand for electricity will of course grow, as will demand for smart electric solutions. We invest in companies that install smartness into the electric future.

AFK ownership 71%

Headquarter Sherbrooke, Canada

Market cap (31.12) 739 MNOK

Listed at Oslo Børs

AFK ownership 95%

Head office Skien, Norway

Property

AFK ownership 100%

Head office Arendal, Norway

Green energy

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

AFK ownership 100%

Head office Froland, Norway

AFK ownership 100%

Head office Arendal, Norway

AFK ownership 100%

Head office Arendal, Norway

Investments are based on an understanding of Arendals Fossekompani having the competence and energy necessary to be the best owner in a long-term perspective. Our investments are concentrated within four areas: Green Energy, Digitalization & Big Data Analytics, Electrification & Materials, and Property.

Arendals Fossekompani Assets

AFK Vannkraft Portfolio company

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.

Head office

Froland, Norway Chair

Trond Westlie

Operating Manager Jan Roald Evensen

Employees 15

Countries

FINANCIAL FIGURES (MNOK)
--------------------------

Running water is an important part of our running business. For more than 100 years, we have extracted energy from the river Nidelva in the Arendal watercourse.

Operating revenue	606	373	63
Operating profit (EBIT)	535	298	-2
Operating margin	88%	80%	-3%
Earnings before tax (EBT)	535	298	-2
Provision for income tax	387	130	-3
Earnings after tax (EAT)	148	169	1


e)	20	23	12
Scope 2 GHG (Location based) (tCO2 e)	1.9	2.6	3.0
Scope 3 GHG (tCO2 e)	7.8	18	0.2
Energy consumption (MWh)	357	277	173

Sick leave	5%	-	-
Absentee rate	6%	1.3%	7.9%
Turn-over rate	0%	0%	0%
Women in Board of Directors	43%	43%	43%

No of reported incidents/breach of CoC/SCoC	0	-	-
Operations assessed for corruption risks	100%	100%	-

FINANCIAL FIGURES (MNOK)		2022	2021	2020
	Operating revenue	606	373	63
	Operating profit (EBIT)	535	298	-2
	Operating margin	88%	80%	-3%
	Earnings before tax (EBT)	535	298	-2
	Provision for income tax	387	130	-3
	Earnings after tax (EAT)	148	169	1

SUSTAINABILITY KPIs		2022	2021	2020
Environment	Scope 1 GHG (tCO2 e)	20	23	12
	Scope 2 GHG (Location based) (tCO2 e)	1.9	2.6	3.0
	Scope 3 GHG (tCO2 e)	7.8	18	0.2
	Energy consumption (MWh)	357	277	173
Social	Lost time injury rate	0	0	0
	Sick leave	5%	-	-
	Absentee rate	6%	1.3%	7.9%
	Turn-over rate	0%	0%	0%
	Women in Board of Directors	43%	43%	43%
Governance	CoC signed	100%	100%	100%
	No of reported incidents/breach of CoC/SCoC	0	-	-
	Operations assessed for corruption risks	100%	100%	-
	Training in CoC and Whistleblower policy	100%	100%	-

Power price in the NO2 price area and power generation for Arendals Fossekompani per week for the period 30/09/2021 – 31/12/2022.

POWER PRICE & POWER GENERATION

AFK Vannkraft is required by law to improve the power plants and associated dam facilities, and consequently Arendals Fossekompani is planning upgrades to both plants in the coming years. The reconstruction of dams will start once detailed requirements have been agreed with the Norwegian Water Resources and Energy Directorate (NVE).

AFK Vannkraft reported revenues of NOK 606 million (373 million) in 2022. EBITDA amounted to NOK 545 million (308 million) and operating profit to NOK 535 million (298 million). Net financial items consist primarily of internal and external dividends and transactions effects, currency effects, and interest costs.

Provision for income tax amounted to NOK 378 million (130 million) in 2022. The tax provision reflects the following changes in the tax regime for Norwegian hydropower producers, as presented by the Norwegian government on 28 September 2022: i) increased resource rent tax from 37% to 45% as of 1 January 2022 and ii) high-price contribution tax of 23% applicable from 28 September 2022 on realized monthly average electricity prices above NOK 0.7/kWh. These changes resulted in an incremental provision for income tax amounting to NOK 75 million in 2022.

Electricity prices in southern Norway rose in the three first quarters of the year. However, in the fourth quarter the prices started to decrease, resulting in an average price in the NO2 price area for 2022 of 211 EUR/MWh (71 EUR/MWh). This is the highest annual price level seen in the NO2 price area. The high price level was a result of several factors, including i) low hydro reservoir levels, due to low inflow and low snow reservoirs from the winter season, ii) strong interconnections from the NO2 price area to the European power market, and iii) high prices for coal, gas, and CO2 lifting the European prices for electricity.

Our hydropower plants had some minor interruptions due to planned maintenance and inspections in 2022. Power generation amounted to 351 GWh (517 GWh). The Norwegian Water Resources and Energy Directorate issued a special permission for the minimum water flow regulation in the watercourse to be reduced from 40 to 30 m3 /s for the summer season and until 1 November, which resulted in record low production in this period. AFK has a defined strategy of selling hydropower production in the day-ahead (spot) market.

Precipitation and inflow by the end of the year were respectively around 91% and 76% of the norm for the watercourse. The accumulated amount of snow and the reservoir levels in the water course was higher than normal by year-end.

Essential audits and maintenance routines took place during the year with established control procedures for the hydropower facilities.

In 2022, our Scope 1 emissions were 20 tCO2 e, compared to 23 tCO2 e in 2021. Our location-based Scope 2 emissions were 2,2 tCO2 e, slightly lower than the year before. e in 2022.

Our Scope 3 emissions were 52 tCO2

During 2022 we conducted a risk and vulnerability assessment regarding HSE and worktasks to identify possible hazards and increase awareness. All incidents are

recorded. In 2022 there was no incidents.

Species of fish affected by our hydropower stations have been subject of an external audit. In 2022, there were three species of fish in the watercourse, which is the same

as in previous years.

OUTLOOK

Considering the market's estimated power price trends for 2023, water levels and forecasted production, AFK Hydropower expects revenues and operating profit for 2023 to be lower than in the record-breaking year 2022.

Actual energy prices depend on many factors, including hydrological balance, oil and gas prices, weather conditions, temperatures, and more. With limited reservoir capacity, the production volume will also be dependent on precipitation.

AFK Hydropower will perform a complete environmental risk and vulnerability assessment in 2023, to further map and improve the impact on the surrounding

environment.

Rehabilitation of the exterior of the Bøylefoss hydropower plant building will start

in 2023.

We aim to distribute a new Business Partner Code of Conduct in 2023.

Ampwell Portfolio company

Ampwell was established by Arendals Fossekompani in 2022 to build an eco-system for battery technology and a Battery-as-a-Service business model. Efficient energy storage solutions are needed to reduce energy costs and enable the green transition. With Ampwell, it is possible to fully utilize non-flexible power production, like wind and solar, to secure a functional and stable energy grid.

In April 2022, Arendals Fossekompani acquired 54.9% of Commeo, a German company specializing in energy storage and energy management solutions. Commeo provides solutions for commercial and industrial energy storage by manufacturing battery modules and rack systems, including control units and software for monitoring and data logging. Commeo's energy storage solutions could for example be used for 'peak-shaving' purposes (using energy from the battery racks during peak price periods to avoid steep tariffs charged by the energy system operators) or time shifting (to reduce energy costs by shifting energy consumption to low price periods).

Head office Arendal, Norway

Chair Torkil Mogstad

Chief Executive Officer Torkil Mogstad

Ownership 100%

Employees 60 Countries

Operating revenue
EBITDA
Operating profit (El
Operating margin
Earnings before tax
Operating cash flow
NIBD
Equity
Equity ratio

	2022	2021	2020
Operating revenue	105	-	-
EBITDA	-38	-	-
Operating profit (EBIT)	-53	-	-
Operating margin	-50%	-	-
Earnings before tax (EBT)	-62	-	-
Operating cash flow	-64	-	-
NIBD	373	-	-
Equity	31	-	-
Equity ratio	6%	-	-

SUSTAINABILITY KPIs		2022	2021	2020
Environment	Scope 1 GHG (tCO2 e)	26	-	-
	Scope 2 GHG (location-based) (tCO2 e)	15	-	-
	Scope 3 GHG (tCO2 e)	36	-	-
	Energy consumption (MWh)	227	-	-
Social	Lost time injury rate	17	-	-
	Sick leave	6.4%	-	-
	Absentee rate	6.4%	-	-
	Turn-over rate	17%	-	-
	Women in Board of Directors	0%	-	-
Governance	CoC signed	0%	-	-
	No of reported incidents/breach of CoC/SCoC	0	-	-
	Operations assessed for corruption risks	0%	-	-
	Training in CoC and Whistleblower policy	0%	-	-

Established in 2014, Commeo has over the years developed its proprietary energy storage system and is now in a position where the product can be manufactured on an industrial scale. Commeo systems typically range from 50 kWh to 1 MWh, but the modular plug-and-play setup allows for even larger systems. The company is on a strong growth trajectory and has started the construction of a new production facility which will be one of Germany's largest.

In 2022, Arendals Fossekompani acquired 40% of Cellect Energy, a Spanish company currently developing analysis and control software in cooperation with some of the largest energy players in Europe. The solutions are specifically designed for the stationary storage market and will help customers utilize the stored energy in the best possible manner. The solutions are meant to be agnostic, which means they will be able to connect to several different batteries, independent of manufacturer and technology. Arendals Fossekompani will reach majority ownership by the end of H1 of 2023.

2022 IN BRIEF

Revenues for 2022 (June-December) amounted to EUR 10.5 million, and operating profit in the same period was EUR -5.8 million. Revenues were driven by increasing battery module sales in Commeo throughout the year and increased production capabilities. Investments in growth in Commeo and Cellect Energy, as well as at Ampwell parent level, contributed to negative margins in 2022.

The construction of Commeo's new semi-automatic production facility is currently ongoing. The first part of the new production facilities is estimated to be finalized in mid-2024 and will over time enable production capacity above 1 GWh. The demand for stationary storage, and the sales pipeline for Commeo, continues to increase.

Since the beginning of 2022, Cellect Energy has rapidly developed its software platform, with new applications being developed according to plan. In parallel, the company has built a strong pipeline of leads and trial customers, from small commercial & industrial operations, to large and international utility-scale clients.

In 2022 Ampwell performed a double materiality analysis resulting in the following focus areas: Reliable and resilient energy, Circularity and lifecycle management, Material sourcing and supply chains, Attractive employer, and Business ethics.

In its first year of business, Ampwell started to report on its Scope 1, Scope 2 and Scope 3 emissions. Emissions stem almost entirely from the Commeo production facility. Scope 1 emissions in 2022 were 26 tCO2 e, mainly from transportation. Scope 2 emissions are related to consumption of electricity at the production facility in Germany and was 15 tCO2 e in 2022, where most of the energy is bought with guarantees of origin. Scope 3 emissions in 2022 were 36 tCO2 e and related to waste and business travel.

Ampwell did its first assessment of activities against the EU Taxonomy, where Commeo's activities were assessed. 100% of Commeo's revenue was found to be aligned with the activity 'storage of electricity'.

OUTLOOK

Driven by strong demand for energy storage solutions, Ampwell expects to generate strong revenue growth in 2023, which will be its first full year of operation. EBIT is expected to improve from the 2022 level but remain negative for the year due to the ramp-up phase of production of battery modules and development of related software solutions. Uncertainty remains high due to the strained global supply situ-

ation related to components.

In 2023, a sustainability strategy will be developed.

Vergia Portfolio company

Arendals Fossekompani established Vergia early in 2022 to combine all existing green infrastructure projects and related portfolio companies in a new entity. Vergia is a strategic green energy enabler leveraging in-house competence with strategic partners to develop infrastructure projects in alternative verticals within the energy transition sphere.

The Vergia ecosystem includes verticals such as small-scale hydropower, energy parks, power-to-x, offshore wind, and green fuel. Vergia is owned 100% by Arendals

Fossekompani. Head office

Oslo, Norway

Chair Trond Westlie

Chief Executive Officer Martin Kjäll-Ohlsson

Ownership 100%

Employees 3

Countries 1

Operating margin

	2022	2021
Total revenue	1
EBITDA	-7
Operating profit (EBIT)	-7
Operating margin
Earnings before tax (EBT)	-18	-2
Operating cash flow	-7
NIBD	5	-10
Equity	9	18
Equity ratio	28%	100%

SUSTAINABILITY KPIs		2022	2021	2020
Environment	Scope 1 GHG (tCO2 e)	0	-	-
	Scope 2 GHG (location-based) (tCO2 e)	0.1	-	-
	Scope 3 GHG (tCO2 e)	2.8	-	-
	Energy consumption (MWh)	9.1	-	-
Social	Lost time injury rate	0	-	-
	Sick leave	0.8%	-	-
	Absentee rate	0.8%	-	-
	Turn-over rate	0%	-	-
	Women in Board of Directors	0%	-	-
Governance	CoC signed	100%	-	-
	No of reported incidents/breach of CoC/SCoC	0	-	-
	Operations assessed for corruption risks	0%	-	-
	Training in CoC and Whistleblower policy	100%	-	-

OFFSHORE WIND

Arendals Fossekompani and Ferd, two of Norway's leading industrial investment companies, have come together to establish the offshore wind company Seagust. Seagust is structured as a 50:50 joint venture between Vergia and Ferd, with a mandate to become an offshore wind developer with operations domestically and internationally. Seagust and Swedish energy major Vattenfall have joined forces with the intension to bid on two areas in the upcoming Norwegian offshore wind licensing round.

AMMONIA

Vergia and Grieg Maritime Group have joined forces to create a leading provider of green ammonia. North Ammonia is dedicated to developing the next generation green fuels for shipping and transportation. The company builds on extensive first-hand experience: Grieg Maritime Group has more than 60 years of experience in shipping. Arendals Fossekompani has 126 years of experience in industrial developments and green power production. Eydehavn in Arendal has been chosen as the first production site for North Ammonia. Eydehavn is being developed as a maritime hub and is ideally located for green ammonia production and distribution. MoUs have been signed with maritime end-users. World-class technology, engineering and maritime cooperation partners are in place to develop the project and production facility.

SMALL-SCALE HYDROPOWER

Demand for electricity is expected to grow significantly in years to come, due to electrification of the transportation and industry sectors, increased household consumption, and interconnectors between the Nordics and Europe. Vergia has two small-scale hydropower development projects; Kilandsfoss and Glomsdam, which can contribute with an annual production of 38 and 7.3 GWh respectively.

ENERGY PARKS

Vergia is developing Bøylestad Energy Park, an industrial and commercial area facilitating energy intensive industry, powered by renewable energy. The area is situated next to one of the largest energy hubs in Southern Norway, which makes for a highly suitable area for power intensive industries. Bøylestad Energy Park also offers proximity to highway systems, railway, and a port, which further increases the strategic value of the area.

HYDROGEN

Vergia, Kongsberg Maritime and Moreld have joined forces to develop a combined offshore substation and hydrogen factory. Hydepoint is a complete solution for receiving, converting, and transmitting the full energy potential from offshore wind farms, with reduced dependence on the onshore power grid. Placed in the ocean, close to wind farms, Hydepoint can convert all or part of the energy into hydrogen. This will reduce the need for upscaling the power grid both to and on land.

SUSTAINABILITY

In 2022, Vergia performed a double materiality assessment for two areas; Vergia's own operations and Vergia's projects. For its own operations, Vergia will focus on business ethics and strive to be a great place to work. For its projects, Vergia will focus on enabling the green transition, minimising impact on nature, and creating value for local communities.

Vergia's GHG emissions include Scope 2 and Scope 3 emissions. Scope 2 is electricity consumption in office spaces and was 0.1 tCO2 e in 2022. Scope 3 emissions are from waste and business travel and was 2.8 tCO2 e in 2022.

OUTLOOK

In 2023, Seagust will enter a bid in the first Norwegian offshore wind licensing round. Kilandsfoss Hydropower Plant will begin construction.

Vergia will work to meet the requirements of the EU Taxonomy.

NSSLGlobal Portfolio company

Building on more than 50 years of experience in the maritime and military mobility markets, NSSLGlobal is a well-run company with solid results over the last decades. With world-class technology and a unique understanding of its clients, NSSLGlobal is able to provide vital services in demanding situations anywhere in the world. This provides for solid revenues and attractive margins. Arendals Fossekompani has been the majority owner of NSSLGlobal since 2010.

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 government sector, large international corporations and the energy sector.

London, UK

Chair Arild Nysæther

Chief Executive Officer Sally-Anne Ray

Ownership 80%

Employees 223

Countries 10

Operating revenue
EBITDA
Operating profit (El
Operating margin
Earnings before tax
Operating cash flow
NIBD
Equity
Equity ratio

	2022	2021	2020
Operating revenue	1,042	907	898
EBITDA	255	208	214
Operating profit (EBIT)	209	166	162
Operating margin	20%	18%	18%
Earnings before tax (EBT)	236	178	154
Operating cash flow	154	197	166
NIBD	-356	-322	-274
Equity	524	458	424
Equity ratio	57%	57%	56%

SUSTAINABILITY KPIs		2022	2021	2020
Environment	Scope 1 GHG (tCO2 e)	180	83	167
	Scope 2 GHG (location-based) (tCO2 e)	120	125	134
	Scope 3 GHG (tCO2 e)	270	100	41
	Energy consumption (MWh)	1,563	1,024	576
Social	Lost time injury rate	0	0	0
	Sick leave	1.8%	-	-
	Absentee rate	1.8%	1.0%	1.0%
	Turn-over rate	24%	1.8%	13%
	Women in Board of Directors	33%	50%	50%
Governance	CoC signed	100%	100%	100%
	No of reported incidents/breach of CoC/SCoC	0	-	-
	Operations assessed for corruption risks	0%	0%	-
	Training in CoC and Whistleblower policy	100%	100%	-

NSSLGlobal has more than 50 years of experience in the maritime and military mobility markets. The company operates its own Global VSAT network using its own patented Satlink Hub and Modem technology, as well as partnering with other established satellite and mobile operators such as Inmarsat IridiumThuraya and Vodaphone and more recently with LEO operator Starlink. Customers are supported locally via global sales and service offices, 24/7 network operations centers, teleports and a global network of local service partners.

NSSLGlobal is headquartered in the United Kingdom, but also has offices in Germany, Denmark, Norway, Sweden, Poland, Netherlands, Singapore, USA, Israel, and Japan. The revenue model is to a large degree based on multi-year subscription and sup port contracts, thereby securing a significant degree of recurring revenues. Its main customers are found in the maritime segment, in the military and government sector, and in the energy sector.

2022 IN BRIEF

(Figures in parentheses refer to the same period the previous year)

NSSLGlobal reported revenues of GBP 88.0 million (76.7 million) in 2022. EBITDA amounted to GBP 21.5 million (17.6 million). Operating profit was GBP 17.7 million (14.0 million), while the ordinary profit after tax was GBP 15 million (12.0 million).

Revenue growth in 2022 was largely driven by increased government airtime, equip ment sales and projects related to increased operational activity caused by the war in Ukraine. In addition, expansion of maritime and government projects contributed positively, while delays in component and hardware deliveries had a slight negative impact on growth during the year.

Operating margin for the year of 20% (18%) was largely related to higher airtime and project revenues with a positive margin impact.

The company experienced healthy sales throughout the year, including new VSAT leasing orders, governmental and maritime engineering orders, as well as defense contracts across Europe. NSSLGlobal and its team partners did not win the spe cific Skynet Service Delivery Wrap contract to operate and manage UK Ministry of Defence's (MoD) constellation of military satellites beyond 2024, but remains a sig nificant service provider to the MoD through a number of other framework agree ments and recent contract wins.

Examples of contract wins during Q4 include a new multi-million 3-year Ships Alongside contract with Defence Digital, UK Ministry of Defence, including service management, engineering services and support for a number of UK and International Dockyards and including installations in ships and submarines. The company was also awarded a contract with the Bavarian State Ministry of the Interior to strengthen the state's critical communications infrastructure. The company secured a 3-year contract with Mitsui OSK LNG Transport (Europe) Ltd, for their fleet, including VSAT, Entertainment and Cyber services as well as FusionIPLeo trials which will be rolled out in the first quarter of 2023.

NSSLGlobal's FusionIPLeo service offers a hybrid of the best of GEO, LTE and LEObased satellite constellations. It combines the trusted benefits of a global, high availability GEO service with the low latency and high capacity from LTE, incor porating the rapidly expanding LEO constellations as of Q1 2023. 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.

In 2022, Scope 1 GHG emmissions were 180 tCO 2 e, related to company-owned fos sil-fueled cars and gas usage for stationary combustion. Emissions will decrease as NSSLGlobal makes its fleet of vehicles hybrid or fully electric over the next 2-3 years. Scope 2 emissions was 120 tCO 2 e in 2022, a slight reduction from 125 tCO 2 e in 2021. Scope 3 emissions consists of waste, business travel and fuel-and-energy-related activities.

NSSLGlobal conducted an EU Taxonomy eligibility assessment and found two eligible activities. These have not yet been assessed for alignment.

100% of the employees received training in and signed the Code of Conduct. The sick leave remained low at 1.8%, and the turnover rate was 24%. 33% of Board of Directors in NSSLGlobal are women.

OUTLOOK

NSSLGlobal expects 2023 revenues to be in line with 2022, driven by a solid pipeline for sales and bid, somewhat offset by lower expected airtime. Operating profit is expected to be lower than in 2022, driven by the latter, as well as inflation-driven

cost increases.

A long-term goal is to reduce greenhouse gas emissions by 50% by 2035. In 2023, NSSLGlobal will roll out phase 3 of its Energy Savings Opportunities Scheme and the Streamlined Energy and Carbon Reporting programmes for the UK part of

the company.

NSSLGlobal will continue its oversight of key vendors to ensure legislative compli ance to policies and procedures. The company aims to engage locally to identify envi ronmental initiatives which can support local communities, and to identify certified schemes which can offset greenhouse gas emissions.

Volue Portfolio company

Arendals Fossekompani created Volue in 2020 based on the belief that the world of energy would become increasingly volatile, and that this would require new ways of thinking, new competence, and new technology. As a testament to this vision being right, Volue continues to build its European presence while expanding to other continents. As a provider of competence and software that enable its customers to succeed in the green transition, Volue enjoys a profitable and promising position.

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. 750 employees work with more than 2,200 customers across energy, power grid, water and infrastructure projects that ensure a sustainable, flexible and reliable future. Volue operates within three segment, Energy, Power Grid and Infrastructure. The company is active in 40+ countries.

Head office Oslo, Norway

Chair Ørjan Svanevik

Chief Executive Officer Trond Straume

Ownership 60%

Employees 778

Countries

Operating revenue
EBITDA
Operating profit (E)
Operating margin
Earnings before ta
Operating cash flow
NIBD
Equity
Equity ratio

	2022	2021	2020
Operating revenue	1,217	1,041	891
EBITDA	147	138	148
Operating profit (EBIT)	40	45	82
Operating margin	3%	4%	9%
Earnings before tax (EBT)	36	40	73
Operating cash flow	214	131	190
NIBD	-426	-382	-432
Equity	809	767	743
Equity ratio	43%	44%	50%

SUSTAINABILITY KPIs		2022	2021	2020
Environment	Scope 1 GHG (tCO2 e)	17	0	0
	Scope 2 GHG (location-based) (tCO2 e)	111	96	641
	Scope 3 GHG (tCO2 e)	404	89	112
	Energy consumption (MWh)	2,040	2,078	-
Social	Lost time injury rate	0	0	-
	Sick leave	2.7%	-	-
	Absentee rate	2.7%	2.2%	2.0%
	Turn-over rate	17%	11%	11%
	Women in Board of Directors	50%	50%	12%
Governance	CoC signed	97%	89%	-
	No of reported incidents/breach of CoC/SCoC	1	-	-
	Operations assessed for corruption risks	100%	-	-
	Training in CoC and Whistleblower policy	0%	-	-

2022 IN BRIEF

(Figures in parentheses refer to the same period the previous year)

Volue reported operating revenues of NOK 1,217 million (1,041 million), corresponding to 17 percent growth year-on-year. EBITDA amounted to NOK 147 million (141 million). The operating profit was NOK 40 million (45 million), while the ordinary profit before tax was NOK 36 million (40 million).

Revenue growth was mainly driven by the Energy Segment, which increased by 28% from NOK 595 million in 2021 to NOK 762 million in 2022. Volue`s Software-as-a-Service (Saas) revenues grew at a higher pace than the top line, underpinning the shift in business model. Adjusted EBITDA for the group was NOK 203 million (214 million) with an adjusted EBITDA margin of 17%.

The company is continuing to build a highly sticky customer base and yet again reported an annual churn well below 2 percent, statistically suggesting an average customer lifecycle of 50 years.

Annual recurring revenues reached NOK 765 million in 2022, a 15 percent growth from 2021, while SaaS revenues showed a 28 percent growth year-on-year. Energy Market Operations contributed with strong non-recurring revenues in 2022, driven by unparalleled volatility in energy markets.

Volue has taken steps to integrate climate risk assessments into the company's risk management process. GHG emission reporting has been expanded to include waste and electricity upstream in the Scope 3 emissions. In 2022, the Scope 3 emis sions were 404 tCO 2 e. Scope 1 emissions were 17 tCO 2 e, which is from 5 fossil-fuelled company cars. Location-based Scope 2 increased to 111 tCO 2 e from 96 tCO 2 e during 2022. There is an ongoing preparation for committing to targets in line with the Paris agreement and the 1.5 degree scenario.

Volue did an EU taxonomy assessment and found 4 eligible activities. 3 of these activities were found to be aligned.

Turn-over rate increased from 11% in 2021 to 17% in 2022. 50% of Volue's Board of Directors are women.

97% of employees have confirmed that they have read and understood the Code of Conduct. Volue is in an ongoing process to have all suppliers sign the Supplier Code of Conduct or to provide documentation of compliance with Volue's Code of Conduct. In 2022, there was one reported Code of Conduct or Supplier Code of Conduct incidents.

KEY DEVELOPMENTS

The year brought sales of strategic magnitude in all segments. Volue made a break through deal with a German power major in the Energy segment. The customer has split its business into "Green" and "Brown" power production, and chose a cross-port folio platform of capabilities from Volue with the goal to digitise the entire value-chain of its renewable portfolio. The contract was signed less than five months after the first point of contact, which demonstrates that Volue's customer-base is moving faster, and perhaps becoming less conservative. This puts Volue in pole position for winning market-shares. After conducting a comprehensive market analysis, the customer found Volue to be unmatched in the competitive landscape. Winning this breakthrough contract, also brings validation to Volue's ambitions for continental Europe.Volue is also very excited to announce its first customer in Japan, following the entrance into the Japanese market during 2022.

Volue also signed a transformative deal in the Power Grid segment. To meet the expectations of fast and efficient electrification of society, Volue and a major Nordic utility have signed a strategic contract. The joint goal is to launch a set of solutions that will enable the utility to digitise the end-to-end process of planning and con structing new grids. These solutions will be modular, targeting a wider European market, deployable across different geographical markets and regulations. By auto mating what is today manual work processes and enabling mobile access, the end result is a streamlined workflow and high efficiency improvements for electrical util ities. This will significantly strengthen Volue's offering in Europe.

In the Infrastructure segment, the Construction division reached 1,000 customers and added 100 in 2022. All of them were SaaS contracts and 30 were in Sweden.

To remain an attractive employer to a diverse pool of talents, Volue launched a diver sity and inclusion policy in March. A new and common standard for performance reviews for all employees was implemented in January.

A Volue Sustainable Leader programme was established, with 90 participating leaders attending during the year.

Volue's 24/7 security monitoring and response capabilities has been strengthened. The number of employees that have signed the information security policy has increased during the year and a common contingency plan has been implemented.

OUTLOOK

Volue continues to prioritise strategic investments in its SaaS platform and expan sion into new markets. This creates short- to mid-term EBITDA impact and increased R&D capitalisation in line with plans. Measures are in place to counter margin effects, and Volue will work diligently to improve profitability going forward. The long-term ambition of NOK 2 billion in revenues, including M&A, by 2025 is maintained. The long-term target of 15% annual organic revenue growth is also maintained, with 2023 growth expected somewhat under the long-term target. The 2025-targets for adjusted EBITDA margin are under review. For 2023 Volue sees adjusted EBITDA margin improving from 2022 levels. ARR and SaaS are expected to improve in line

with 2022 performance.

For 2023, Volue has outlined the following priorities and ambitions:

• Capitalize on changing energy market dynamics.

• Focus on margin-improving initiatives.

• Continue to grow ARR business in line with 2022 performance.

• Strategic investments for international growth.

• Structural growth through M&A.

• Expand activities outside the Nordics.

• Implement a diversity initiative across gender and ethnicity. The goal is to have 25% female share by the end of 2023 and 30% by 2025.

• Increase effort and focus on systematic HSE work, risk assessment and reporting of occupational incidents. Volue will build a succession plan for all key roles, with female successors for at least 50% of the roles.

• Conduct a mapping of business partners in terms of potential risks to human rights and decent working conditions.

• Finalise and implement environmental policy.

• Implement a framework to include EU Taxonomy eligibility assessment for new business cases.

Alytic Portfolio company

Established by Arendals Fossekompani in 2021, Alytic builds on the competence and methodology that grew former AFK portfolio company Wattsight (now part of Volue) to become a digital European powerhouse for energy market data. The main goal for Alytic is to grow companies to world-class businesses within their respective industries. An investment team work closely with the portfolio companies to drive value through strategic development and implementation, leadership support, sales enhancement, HR and talent acquisition, and by leveraging data science and technology.

Alytic creates value by developing sustainable companies that centre around expertise and data. There is significant untapped opportunity in utilizing data effectively for insights and actions across numerous industries and markets. There is a growing Head office demand for more advanced solutions to manage, analyse, and present information.

Arendal, Norway

Chair Lars Peder Fensli

Chief Executive Officer Espen Zachariassen

Ownership 95%

Employees

Countries 3

Total revenue
EBITDA
Operating profit (E
Operating margin
Earnings before ta
Operating cash flo
NIBD
Equity
Equity ratio

	2022	2021	2020
Total revenue	41	27	2
EBITDA	-41	-12	-1
Operating profit (EBIT)	-46	-16	-1
Operating margin	-112%	-58%	-66%
Earnings before tax (EBT)	-45	-16	-1
Operating cash flow	-35	-12
NIBD	-45	-25	-32
Equity	132	80	59
Equity ratio	67%	74%	80%

SUSTAINABILITY KPIs		2022	2021	2020
Environment	Scope 1 GHG (tCO2 e)	0	0	-
	Scope 2 GHG (location-based) (tCO2 e)		2.4 Incl. in AFK	-
	Scope 3 GHG (tCO2 e)	57	-	-
	Energy consumption (MWh)	324	-	-
Social	Lost time injury rate	0	0	-
	Sick leave	3.2%	-	-
	Absentee rate	3.2%	0.7%	-
	Turn-over rate	13%	17%	-
	Women in Board of Directors	21%	50%	-
Governance	CoC signed	20%	0%	-
	No of reported incidents/breach of CoC/SCoC	0	-	-
	Operations assessed for corruption risks	94%	-	-
	Training in CoC and Whistleblower policy	20%	18%	-

2022 IN BRIEF

(Figures in parentheses refer to the same period the previous year)

Alytic reached three significant milestones in 2022: The first was to establish itself in the ESG services vertical, which was done through the acquisition of Factlines, a Norwegian SaaS company. The second was to develop a new, expansive strategy for Greenfact, with further investment to position the company as a global provider of insights in markets supporting the transition to net-zero. In line with this strategy, Greenfact was rebranded to Veyt in the first quarter of 2023. The third was the launch of Edge by Kontali, a new seafood analytics portal and API offering.

During the second quarter, Alytic acquired a majority stake in Factlines AS, a Norwegian SaaS company specializing in supply chain mapping and transparency. Factlines' streamlined software covers the entire process from OECD requirements and Code of Conduct, to risk analysis, monitoring, and communication. The acqui sition of Factlines aligns with Alytic's strategy and goal to create a European hub for responsible supply chains, ESG reporting, and product life cycle assessment (LCA). Since the acquisition, the focus has been on building a robust management team and enhancing the product, technology, and design capabilities within the organization.

In 2022, Alytic followed up on its ambition to develop Veyt into a globally leading pro vider of insights and analytics for renewable energy and decarbonisation. During the year, the company went from being a niche supplier of market analysis to positioning itself as a globally leading expert on both renewable energy certificates markets, the compliance carbon markets and the voluntary carbon markets. A new product platform was developed along with a suite of analytics tools to deliver these insights and support clients with advanced analytics and forecasts. Building on an existing base of more than 120 international clients, Veyt is well positioned to take advantage of the increased focus on the renewable energy sector and decarbonisation through a line-up of new products, reports, webinars, and podcasts.

Alytic's first acquisition, Kontali, a premier knowledge-based consultancy and data provider for the fish farming industry, achieved a major accomplishment in 2022. Through extensive tech talent acquisition in 2021, Kontali doubled in size and successfully launched its seafood insights platform, Edge, in the fourth quarter of 2022. Edge has received positive market reception, with Kontali successfully onboarding a growing number of new and existing clients to the platform.

Utel, an Alytic portfolio company since 2021, acquired senior machine learning engi neering and UX design talent to strengthen its technology team. Throughout the year, Utel worked closely with customers to test prototypes for their new network anomaly detection solution, building on its existing telco fraud detection solution. The development of a more general solution opens new application areas for Utel, with significant growth potential expected from emerging technologies such as 5G and an increased market need to fight and prevent fraud.

Reported for the first time ever, Scope 3 emission for 2022 were 57 tCO 2 e and related to travel and waste. Scope 2 emissions are from the portfolio companies, and Scope 1 emissions remained at zero. An EU Taxonomy assessment has been conducted and Alytic has identified two eligible activities. It has been concluded that these activities are not yet aligned with the EU taxonomy.

Assessments of each portfilio company 's value chain was performed in a due dili gence process. Alytic is continuously addressing relevant issues with the manage ment of the portfolio companies to ensure that all workers and contractors have good working conditions.

21% of Alytic's Board of Directors are women.

20% of Alytic's employees have signed and received training in the Code of Conduct.

OUTLOOK

In 2023, Alytic's portfolio companies are transitioning from a development phase to a growth and commercialization phase. Throughout the year, the Alytic companies expect to see innovative new products brought to market, creating substantial value for customers, driving both revenue growth and stronger positions in their relevant

markets.

Alytic continues to invest in its existing portfolio and to search for new acquisition

targets.

In 2023, a sustainability strategy with associated targets will be developed for each

portfolio company.

Tekna Portfolio company

Arendals Fossekompani acquired Tekna in 2013 to pursue the opportunities presented by a unique and promising technology developed at the University of Sherbrooke in Canada. Tekna produces plasma systems and spherical metal powders in different alloys and sizes, suitable for additive manufacturing and industries such as electronics and batteries. This gives Tekna an attractive position in global megatrends.

Tekna is a world-leading provider of advanced materials and plasma systems to several industries. Tekna produces high-purity metal powders for applications such as 3D printing in the aerospace, medical and automotive sectors, as well as optimized 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 electronics and batteries

industries.

Head office Sherbrooke, Canada

Chair Dag Teigland

Chief Executive Officer Luc Dionne

Ownership 71%

Employees 216

Countries

Operating revenue
EBITDA
Operating profit (EI
Operating margin
Earnings before tax
Operating cash flov
NIBD
Equity
Equity ratio

	2022	2021	2020
Operating revenue	199	184	150
EBITDA	-124	-71	10
Operating profit (EBIT)	-153	-89	-24
Operating margin	-77%	-49%	-16%
Earnings before tax (EBT)	-166	-98	-48
Operating cash flow	-145	-89	2
NIBD	-40	-215	150
Equity	389	531	128
Equity ratio	72%	82%	36%

SUSTAINABILITY KPIs		2022	20211	2020
Environment	Scope 1 GHG (tCO2 e)	585	577	474
	Scope 2 GHG (location-based) (tCO2 e)	34	42	3
	Scope 3 GHG (tCO2 e)	755	432	-
	Energy consumption (MWh)	11,583	7,435	5,799
Social	Lost time injury rate	2.7	3.4	0
	Sick leave	3%	-	-
	Absentee rate	3%	2%	2.4%
	Turn-over rate	22%	15%	6%
	Women in Board of Directors	40%	0%	0%
Governance	CoC signed	91%	82%	99%
	No of reported incidents/breach of CoC/SCoC	1	-	-
	Operations assessed for corruption risks	0%	0%	-
	Training in CoC and Whistleblower policy	0%	0%	-
	1. 2021 numbers were revised in 2022.

2022 IN BRIEF

(Figures in parentheses refer to the same period the previous year)

Tekna reported revenues of CAD 26.9 million (CAD 26.8 million) in 2022. Adjusted EBITDA amounted to CAD -12.8 million (-4.6 million). The operating profit was CAD -20.7 million (-12.5 million), while earnings before tax was CAD -22.5 million (-14.3 million).

Throughout 2022, Tekna continued experiencing rising demand for its materials for Additive Manufacturing, further confirming the company's position in this market. Tekna's additive material sales grew by 8% in 2022, despite capacity constraints and R&D work impacting the production. Significant new orders were signed during the year, and Tekna is experiencing a gradual shift towards larger orders and long-term supply agreements.

Total order backlog at the end of 2022 was CAD 25.0 million. This is a 64% increase year-on-year, which provides a strong momentum going into 2023. The backlog for additive materials amounted to CAD 14.1 million.

On 1 July 2022, Tekna Holding was uplisted to the main list at Oslo Børs. This further increases the company's visibility in the marketplace and cements its position as a global provider of advanced material solutions.

Tekna has seen the Systems market rebound with several contracts awarded during the year. In October, an order in excess of CAD 9 million was confirmed to deliver PlasmaSonic equipment to a leading aerospace original equipment manufacturer, with delivery planned for early 2024. In January 2023, two more plasma system sales valued at CAD 1.6 million for delivery by end of 2023 were announced.

Tekna achieved ISO 13485:2016 certification for its Additive Materials division in 2022. This certification establishes that the processes Tekna uses to manufacture its commercial powders meet the highest global standards for medical products. Tekna Plasma Systems laboratory achieved ISO 17025:2017, which certifies the analytical services in competence of testing and calibration.

Strong demand and Tekna's increasing market share have made capacity expansion a key priority for the company. The additive material capacity increase program has been progressing well throughout 2022. Increasing capacity will translate into higher material availability, shorter delivery lead-times and increased sales, which is syn chronized with the customer roll-out plan.

Tekna is continuously striving to achieve a climate-friendly production. As a part of this, Tekna completed a first alignment study for the EU taxonomy. In addition, Tekna have updated their system maintenance manuals to recommend green maintenance and guidance on end-to-life disposal. A new prototype for a multiusage powder transportation vessel got certified for road and sea freight. After some design optimization, operations will start in 2023.

Tekna has developed a carbon reduction action plan for more sustainable produc tion. To improve reporting of emissions, the baseline measurement for Scope 3 is continuing. In 2022 Tekna mapped the employee commute and deepened the understanding of the waste category. A productivity improvement of Tekna's plasma systems has been implemented for greater energy conservation. Scope 1 emissions were 585 tCO 2 e in 2022, all these emissions come from use of natural gas. Locationbased Scope 2 emissions were 34 tCO2 e in 2022, down from 42 tCO 2 e in 2021.

Tekna appointed several new board members in 2022, increasing female represen tation from 0% in 2021 to 40% in 2022. Turn-over has increased from 15% in 2021 to 22% in 2022.A Tekna Code of Conduct was approved by the Board of Directors in 2022 and signed by 91% of the employees.

Tekna's suppliers and business partners should respect human rights. To comply with the Transparency Act, Tekna has signed a partnership with Factlines to apply a solid and consistent approach. To handle the climate risk of supply chain, Tekna has mapped the transport routes of critical suppliers and have assessed them for potential risk. Mitigation plans are continuously being developed.

EVENTS AFTER THE CLOSE OF THE YEAR

In January 2023, Espen Schie was appointed Chief Financial Officer of Tekna. Schie brings long-term financial management experience and comes from the role as Vice President of Finance & Controlling at Arendals Fossekompani.

AFK reiterates its long-term support of Tekna. In the first quarter of 2023, Arendals Fossekompani and Tekna signed a CAD 25 million term loan facility agreement to support operations and growth in Tekna.

OUTLOOK

Operating revenues and margins are expected to increase during 2023, supported by the strong order backlog. Increasing production and delivery of additive materials remain top priority to serve the Additive Manufacturing industry, which remains the most prominent segment for Tekna. The company will prioritize near-term revenue opportunities within additive manufacturing and microelectronics in 2023 including the commissioning of three additional powder manufacturing systems.

Tekna has taken important and immediate steps towards improving profitability and cash position. A roadmap to profitability has been drawn up, emphasizing operational excellence, right-sizing of organisation, strict prioritisation of R&D efforts towards AM and Microelectronics, and strategic focus on near term revenue opportunities.

Tekna's strategy, technology and products are considered highly relevant in today's global markets, which are marked by geopolitical turmoil, economic uncertainty, and an urge for sustainability and increased predictability. The company's customers are transitioning towards new technology, moving manufacturing closer to markets whilst considering more sustainable production processes.

Tekna aims to reduce greenhouse gas emissions. The goal for carbon reduction is 50% for Scope 1 and Scope 2. To meet these goals, science-based targets will be developed in accordance with the Science Based Target initiative. After the first EU Taxonomy alignment study was performed in 2022, formal reporting will start in 2023.

Tekna aims to increase Supplier Code of Conduct self-assessment participation by 10%.

ENRX Portfolio company

Following Arendals Fossekompani's acquisition of IPT Technology in May 2022, IPT Technology and long-standing portfolio company EFD Induction was comprised in the new company ENRX. As a frontrunner within both induction charging and induction heating systems, ENRX is established as a global powerhouse for induction technology, serving several large industries.

ENRX combines EFD Induction's global market leadership in industrial induction heating systems (Heat) with IPT Technology's leading technology in the high growth market for wireless induction charging solutions for mobility and industrial applications (Charge). Among the industries served by ENRX are automotive, renewable energy, pipe fabrication, electronics, cable, and mechanical engineering.

Head office Skien, Norway

Chair

Ørjan Svanevik

Chief Executive Officer Bjørn E. Petersen

Ownership 95%

Employees

1,047

Operating revenue
EBITDA
Operating profit (El
Operating margin
Earnings before tax
Operating cash flow
NIBD
Equity
Equity ratio

Countries

	2022	2021	2020
Operating revenue	1,338	1,171	1,104
EBITDA	75	143	109
Operating profit (EBIT)	-3	83	41
Operating margin	0%	7%	4%
Earnings before tax (EBT)	-20	72	30
Operating cash flow	46	96	69
NIBD	425	31	52
Equity	384	405	374
Equity ratio	22%	36%	35%

SUSTAINABILITY KPIs		2022	2021	2020
Environment	Scope 1 GHG (tCO2 e)	766	898	-
	Scope 2 GHG (location-based) (tCO2 e)	2,162	2,557	-
	Scope 3 GHG (tCO2 e)	1,820	1,643	-
	Energy consumption (MWh)	9,428	11,008	-
Social	Lost time injury rate	1.1	2.3	-
	Sick leave	3.5%	-	-
	Absentee rate	3.5%	2.8%	2%
	Turn-over rate	13%	2.2%	11%
	Women in Board of Directors	17%	0%	0%
Governance	CoC signed	65%	100%	-
	No of reported incidents/breach of CoC/SCoC	0	-	-
	Operations assessed for corruption risks	0%	-	-
	Training in CoC and Whistleblower policy	78%	-	-

2022 IN BRIEF

(Figures in parentheses refer to the same period the previous year)

ENRX reported revenues of EUR 132.2 million (115.2 million) in 2022. EBITDA amounted to EUR 7.4 million (14.1 million). The operating profit was EUR -0.3 million (8.2 million), while the ordinary 2022 profit before tax was EUR -2.0 million (7.1 million).

Revenue growth of 15% during 2022 was driven by higher activity level within Heat, as well as a smaller revenue contribution from the Charge division following the acquisition of IPT Technology in May 2022. In geographical terms, the company saw solid growth in all regions during 2022. The growth was in some regions hampered by supply chain disturbances and delayed deliveries.

Operating costs saw an uptick during the year, primarily related to the recognition of a restructuring provision of EUR 3.9 million related to parts of the German operation, component cost increase, and general cost inflation. In addition, costs related to M&A and ERP implementation impacted the cost level in 2022. IPT Technology, acquired during the year, had a negative EBIT contribution of EUR 2.2 million. Adjusted for restructuring costs related to the German operation and one-time costs related to the acquisition of IPT Technology, operating profit for the full year 2022 was EUR 4.1 million, corresponding to an EBIT margin 3.1%.

Overall, the Heat segment did well across all activity areas. The order intake for induction power sources reached an all-time high of EUR 70.1 million, up 52% from 2021. The service and after sales segment reached EUR 51.4 million in order intake, while the sale of induction hardening machines ended up slightly below budget at EUR 35.2 million, due to difficult market conditions in the EU and North America, partly offset by strong demand from Asia.

Despite the acquisition of IPT Technology in 2022, Scope 1 greenhouse gas emissions for the ENRX group was 766 tCO 2 e, down from 898 tCO 2 the year before. Scope 2 emissions were 2,162 tCO 2 e in 2022, down from 2,557 in 2021. Scope 3 emissions were from business travel, waste, and fuel-and-energy-related activities and was 1,820 tCO 2 e in 2022.

Through an EU taxonomy assessment, three activities were identified as eligible, where two of these were concluded to not yet be aligned, and one was not assessed for alignment.

To achieve a more resource efficient production, Evolgy is undergoing an ISO 14001 certification process for all plants. During 2022, such certifications were given to the ENRX plants in Germany, India and China.

Moving closer to its target of 20% female employees in 2025, ENRX Heat increased the ratio from 15.5% in 2021 to 16.1% in 2022, but with the acquisition of IPT Technology, the overall female ratio was still at 15.5%. With a continuous focus on HSE and a vision of zero injuries across all operations, ENRX had 2 injuries in 2022, down from 4 in 2021.

In 2022, all prioritized suppliers in Norway and India completed a self-assessment used by ENRX to evaluate supplier performance. A similar self-assessment is under way in China, Germany, and the US.

OUTLOOK

Order intake held up well throughout the year. Already in October, the Heat segment passed the full year's order intake budget. 2022 ended nearly 30% ahead of target, at an all-time high of EUR 157 million. The current order backlog creates a strong fun dament for continued profitable growth in 2023, and the market for heating products is still considered strong.

Electrification is likely to experience tremendous 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. In the second quarter of 2023, the company will launch a small mobile air-cooled induction heating generator that can be used virtually everywhere electricity is found.

For several years, ENRX has been the leading supplier of equipment to the renew able power sector. The company aims to contribute to the development of electric vehicles. The acquisition of IPT Technology 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.

Both revenue and operating profit is expected to be higher in 2023 than in 2022.

ENRX is committed to reducing its CO 2 footprint and plans to introduce more digital solutions that advance remote assistance and reduce the need for travel. Induction technology is inherently eco-friendly, and ENRX constantly strives to make prod ucts even more energy efficient. The ISO 14001 certification of production facilities continues in 2023. Going forward, ENRX will further expand its portfolio by providing sustainable alternatives for charging electric vehicles as well as power supply solu tions for industrial applications.

Being part of a major global industry, ENRX must demonstrate a sustainable supply chain. ENRX demands from its suppliers in Europe, North America and Asia that they complete a self-assessment questionnaire and sign off on ENRX's Supplier Code of Conduct. For 2023, the goal is to complete this assessment for the remaining pro -

duction facilities.

On route to increasing its ratio of female workforce to 20% by 2025, ENRX's target for 2023 is 18%. ENRX aims to train 83% of the workforce in Code of Conduct in 2023.

AFK Property Portfolio Company

AFK Property comprises all property related companies and property investments in Arendals Fossekompani.

Head office Arendal, Norway

Chair Torkil Mogstad

Chief Executive Officer Tom Krusche Pedersen

Ownership 100%

Employees

Countries 1

Total revenue
EBITDA
Operating profit (E
Operating margin
Earnings before ta:
Operating cash flow
NIBD
Equity
Equity ratio

	2022	2021	2020
Total revenue	35	510	10
EBITDA	6	40	-2
Operating profit (EBIT)	-7	27	-11
Operating margin	-19%	5%	-106%
Earnings before tax (EBT)	-10	25	-13
Operating cash flow	-40	309	-200
NIBD	135	68	355
Equity	206	215	198
Equity ratio	47%	46%	31%

SUSTAINABILITY KPIs		2022	2021	2020
Environment	Scope 1 GHG (tCO2 e)	20	-	3
	Scope 2 GHG (location-based) (tCO2 e)	1.5	-	-
	Scope 3 GHG (tCO2 e)	7.3	34	26
	Energy consumption (MWh)	295	-	-
Social	Lost time injury rate	0	0	-
	Sick leave	3.8%	-	-
	Absentee rate	3.8%	-	-
	Turn-over rate	0%	-	-
	Women in Board of Directors	0%	0%	0%
Governance	CoC signed	100%	0%	-
	No of reported incidents/breach of CoC/SCoC	0	-	-
	Operations assessed for corruption risks	100%	-	-
	Training in CoC and Whistleblower policy	100%	-	-

The portfolio of AFK Property is diverse. It includes the development of a new urban residential area in Arendal, featuring an outdoor recreational space and a public water park – and the management of several properties in Southern Norway.

BRYGGEBYEN

The by far largest company in the property portfolio is Vindholmen Eiendom AS, which is transforming an old shipyard area into a new urban residential/commercial zone right outside the center of Arendal City under the name Bryggebyen. The trans formation will take 10-15 years to complete and will create 500-700 residential units in combination with exciting and highly relevant trade and commerce offerings. The first and second stage of the development was concluded in 2021 and all 113 apart ments were sold before year-end 2021. Not only was this the largest residential proj ect in the region that year, but it also had the quickest sell-out time, demonstrating the attractiveness of the Bryggebyen area. To satisfy the market's desire to be part of Bryggebyen, Arendals Fossekompani made the decision to initiate phase 3 of the Bryggebyen project, adding 48 new apartments. These went on sale in the second quarter of 2022, of which 41 were sold as at 31 December 2022. AFK also plans to build an indoor water park in the area. The municipality of Arendal has signed a longterm rental agreement with the water park.

ARENDAL AIRPORT & PROPERTY GULLKNAPP

AFK Property is the majority owner of this property which comprises a relatively new airport facility and an attractive area of 200,000 sqm. The main user of the airport facility is OSM Aviation Academy which runs a pilot school at the premises. Future plans include developing the airport facility into a center for drones as well as a hub for electrified aviation under the name Gullknapp Aerial Center. The significant size of the area combined with direct access to the high voltage grid has made the property attractive for industrial players, including those drawn to Arendal in connection with Morrow Batteries' plan for establishing a giga-factory for battery cell production. Gullknapp is located about 15 km north of Arendal and therefore in close vicinity to both the new E18 highway and the Port of Arendal. Having its own airport facility is of course also an advantage. Real estate areas for industrial use are becoming scarce around Arendal, and Gullknapp is highly relevant for power and transportation inten sive industries such as battery-related production of cells, electrodes and electrode materials, as well as hydrogen and ammonia production to support the transition into a sustainable future.

BØLEVEGEN 4

This property, located along the Skien River, just one kilometer south of downtown Skien, was acquired in 2020. The 4,700 sqm building is fully let to ENRX on a 15-year bare-house agreement. As the city of Skien expands, this 12,000 sqm river property will be attractive both for commercial and residential development.

LONGUM PROPERTY

In the second quarter, AFK Property acquired 170,000 sqm of mostly commercial land located outside the city of Arendal. The property is close to the E18 highway on route to the main production site of the coming Morrow battery factory. The land is also in the vicinity of Bedriftsveien 17, which is also in the portfolio of AFK property.

BEDRIFTSVEIEN 17

The commercial property Bedriftsveien 17 has been part of Arendals Fossekompani since 2015. The 3,500 sqm building has been completely refurbished and is now fully let to Volue Industrial IoT on a 25-year bare-house agreement. Bedriftsveien 17 is located in the middle of the emerging commercial area Krøgenes, 3 kilometers east of down-town Arendal. The area has grown in attractiveness with a new feed-in road to the new E18 highway recently completed.

SUSTAINABILITY

AFK Property is reporting Scope 1 emissions of 20 tCO 2 e for 2022. These emissions are all at Gullknapp and is from fossil-fuelled cars and chemical de-icing. Scope 2 emissions was 1.5 tCO 2 e and Scope 3 emissions was 7.3 tCO 2 e in 2022.

AFK Property conducts annual environmental audits. For the largest project Bryggebyen, there is a focus on reducing carbon emissions and increasing waste management during the construction phase. At Gullknapp, AFK Property monitors chemical oxygen demand and noise levels. The chemical oxygen demand is well below the 10 tonnes limit, and noise levels are satisfactory.

In 2023, AFK Property will continue work with suppliers throughout the value chain to secure basic human rights and safety and health of people. An updated Business Code of Conduct will be sent out as a part of the supplier contract.

OUTLOOK

In 2023, AFK Property will proceed with the building of 48 units in the Bryggebyen apartment project. All units are scheduled to be finalized in 2024. Regulation of the fourth stage of the Bryggebyen project will be initiated during the year. AFK Property will also proceed with the regulation process for Longum Næringspark, in addition to building a 2,500 square meter facility for ENRX.

From the Boardroom

03

Board of Directors	76
Board of Directors Report	78
Corporate Governance Report	84

Board of Directors

Trond Ødegård Westlie

Director of Board

Trond Westlie (1961) has held the position as Chairman of the Board of Directors of Arendals Fossekompani ASA since May 2022. He is an experienced executive and Chief Financial Officer for large international public corporations. Westlie brings a broad understanding of the financial markets and years of relevant board experience. Westlie is a Certified Public Accountant, holding a degree from the Norwegian School of Economics.