Arendals Fossekompani

Investor Presentation • May 6, 2021

Arendals Fossekompani Interim Report

Q1 2021

Sales. Results. Dividends.

Tekna sales up 83%

Tekna Holding reports an 83 per cent increase in revenues, driven by new customers and increased powder sales. Tekna was listed at Euronext Growth on 30 March.

LIGHTS — Electricity prices surging

—

Dividend to be paid in May

Combining the quarterly dividend and the extraordinary dividend as proposed to the General Assembly, AFK will pay its shareholders NOK 30 per share in May.

The average price of electricity was NOK 0.469/kWh in the first quarter, almost five times higher than the average spot prices in 2020.

—

Operating result more than doubled

Arendals Fossekompani more than doubled its operating result quarter over quarter, from NOK 34 million last year to NOK 83 million this year.

— Volue on track

Volue is on track to meet its own growth target for 2021 and 2025. Volue was transferred to the Oslo Børs main list on 4 May.

+141%

Sales. Profits. Margins.

Financial highlights Q1 2021

MNOK	Q1 2021	Q1 2020	Q4 2020	FULL YEAR 2020
Sales	1 000	951	1 029	3 673
Operating profit	83	34	72	188
Margin	8%	4%	7%	5%
Operating Profit by company
Parent Company	38	-4	-27	-55
Volue	21	24	11	82
NSSLGlobal	29	47	44	162
EFD Induction	3	-11	46	-11
Tekna	-9	-20	15	-24
Cogen Energia	5	2	17	27
Other business	-4	-4	-33	6
Operating profit	83	34	72	188
Profit before income tax	79	-8	55	121

All KPIs and graphs are based on continuing operations.For information on discontinued operations, see Note 6.

KPIs for AFK consolidated, continuing operations

Arendals Fossekompani (AFK) is an industrial investment company holding 7 main investments and a portfolio of financial investments. These operations employ 2,100 people in total. AFK has proud traditions in power production and owns and operates two hydropower plants. In addition, AFK 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.

HIGHLIGHTS – Q1 2021

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

In view of the ongoing Covid-19 pandemic, the Board of Directors and executive management of the AFK companies have taken strong measures to safeguard employees, partners and customers of the portfolio companies.

Total operating revenues for continued operations amounted to NOK 1,000 million (951 million) in the first quarter. Consolidated earnings before tax came in at NOK 79 million (-8 million) for the quarter. Ordinary profit after tax, but before non-controlling interests for continued operations, totalled NOK 32 million (-9 million) for the quarter.

Other comprehensive income amounted to NOK 91 million (-235 million) for the quarter. The differences compared with the previous year primarily relate to the change in the value of financial investments. The Group's total comprehensive income for the quarter came in at NOK 123 million (NOK -244 million).

AFK delivered solid results in the first quarter, increasing operating profit from NOK 34 million to NOK 83 million, and earnings before tax from NOK -8 million to NOK 79 million compared to the same quarter previous year.

All portfolio companies reported strong earnings in the period. AFK also completed several strategic actions in the quarter, including the divestment of 11.8% of the share capital in Volue AS for total gross proceeds of NOK 991 million, issuance of NOK 500 million in unsecured green bonds, divestment of the shareholdings in Victoria Eiendom and Eiendomsspar for total gross proceeds of NOK 829 million, and listing of Tekna Holding AS on Euronext Growth with a private placement raising close to NOK 700 million.

Volue and Tekna delivered particularly solid revenue growth in the quarter. Tekna had a solid start to 2021, posting 83% revenue growth year-on-year in the first quarter, mainly driven by new customers and increased powder sales, a trend which is accelerating. Volue continued the positive development and reported 16% growth in recurring revenue and 49% on SaaS revenues from the corresponding quarter the previous year. With this, Volue is well on track with regards to its 2021 and 2025 targets and ambitions.

EFD Induction reported improved revenues and earnings compared to the corresponding quarter in 2020. Following the record high order intake in the fourth quarter, the order intake remains strong in the first quarter of 2021.

As a result of increased electricity prices, AFK Hydropower contributed with both substantial revenues and a solid operating profit in the quarter. The average price of electricity in Price Area NO2 was NOK 0,469/kWh in the first quarter, almost five times higher than the average spot prices in 2020. Revenues from AFK Hydropower came in at NOK 75 million (27 million) with operating profit at NOK 54 million (7 million). Total revenues were higher in Q1 2021 than in the entire year of 2020.

Through its operations Cogen Energia plays a key part in the green shift in the Spanish power market. Rapid development of the market presents new growth opportunities. AFK has started a strategic process to assess how Cogen Energia can be best positioned to take advantage of these opportunities going forward.

On 17 February AFK reported that the company sold 16,940,200 shares in Volue AS, representing 11.8% of the share capital.

FINANCIAL FIGURES, MNOK	Q1 2021	Q1 2020	Q4 2020	FY 2020
Operating revenue	1000	951	1029	3673
Operating profit	83	34	72	188
Operating margin	8%	4%	7%	5%
Earnings before tax (EBT)	79	-8	55	121
Operating cash flow	284	326	213	248
NIBD	-2231	-378	-461	-461
Equity	5536	3059	3856	3856
Equity ratio	59%	46%	55%	55%

AFK Group

COUNTRIES

26

CHAIRMAN
JON HINDAR
EMPLOYEES
2,100

CEO ØRJAN SVANEVIK

Arendals Fossekompani AFK

The price per share was NOK 58.50 for total gross proceeds of NOK 991 million. The shares were sold to a group of six high quality Nordic and international institutional investors.

On 2 March AFK reported that the company has successfully issued NOK 500 million in unsecured green bonds. The bonds have a 7-year tenor and was priced at a fixed coupon of 2.615%. AFK will use the net proceeds to finance green projects as defined in the AFK Green Bond Framework. The Green Bond Framework has received the best possible rating, Dark Green, by Cicero Shades of Green.

On 12 March Arendals Fossekompani sold all its shares in Victo ria Eiendom and Eiendomsspar for a total of more than NOK 800 million.

On 19 March 2021 Volue applied to be transferred from Euronext Growth to the main list of the Oslo Børs.

On 22 March 2021 Tekna Holding announced a potential listing on Euronext Growth. After a successful private placement, with books covered within minutes, Tekna Holdning was listed on Euronext Growth and trading of the share commenced on 30 March.

The AFK parent company's financial position remains solid. The company's cash reserves strengthened in the quarter and as at 31 March amounted to NOK 2,198 million. In the same period the company's equity increased by NOK 1,112 million and amounted to NOK 4,495 million as per 31 March. The company also has undrawn credit facilities of NOK 1,780 million as per the end of the quarter.

EVENTS AFTER THE CLOSE OF THE QUARTER

On 8 April the Board of Directors decided to propose to the General Assembly to pay an extraordinary cash dividend of NOK 29.20 per share. The annual general meeting will be held on 6 May, whilst the dividend is set to be paid on 18 May.

The Board of Directors decided to also pay an ordinary cash dividend of NOK 0.80 per share for the first quarter 2021. The dividend is also set to be paid on 18 May.

On 21 April Oslo Børs announced the approval of Volue AS for admission to trading on the main list of Oslo Børs. The first day of trading of the shares on Oslo Børs was 4 May.

On 27 April Tekna Holding AS announced the signing of a multiyear joint development agreement with LG Chem to develop new materials that will improve the storage capacity and the cycle stability of Lithium-Ion batteries. Both companies bring patented technology to the project, which will contribute to meeting the accelerating demand for high-performance Lithi um-ion batteries, driven by the growing global need for energy storage.

OUTLOOK FOR 2021

In light of the market's estimated power price trend for 2021, revenues and operating profit for AFK Hydropower are expec ted to be considerably higher in 2021 than in 2020.

Following high activity levels in all portfolio companies, 2021 revenues and earnings for AFK as a whole are expected to be better than in 2020. However, there remains considerable uncertainty associated with the Covid-19 pandemic and the future development of energy prices.

SHARE PRICE

Following the AFK share split on 20 November 2020, in which each share was split into 25 shares, there is a total of 55,995,250 shares in the company. The share price on 31 December was NOK 184 and on 31 March NOK 270, an increase of 47% in the quarter.

The trading volume in the first quarter was approximately 750.000 shares, close to three times higher than the traded volume in the corresponding quarter in 2020. The share price reached an all-time-high in the first quarter at NOK 286, corre sponding to market capitalisation of NOK 16.0 billion.

Number of shares traded Share price

AFK Parent Company Hydropower

HIGHLIGHTS OF Q1 2021

Production in the quarter was around normal levels. Although perciptation in the period was lower than normal, operational pressure remained high due to the high reservoir levels in the upper parts of the Arendal watercourse. Electricity prices rose in the first quarter due to colder weather and the associated increase in power consumption, as well as increased transfer capacity abroad. The plants operated with no significant interruptions or disruption.

Power generation in the first quarter amounted to 168 GWh (172 GWh). The average spot price in the NO2 price area was NOK 0.469/kWh (NOK 0.154/kWh). AFK has a defined strategy of selling hydropower production in the day-ahead (spot) market. Precipitation and inflow in the quarter was respectively around 75% and 95% of the norm for the watercourse.

Due to the Covid-19 pandemic, and as an infection control measure, audits and other projects requiring external access to the power plants were deferred during the quarter. Essential audits and access took place in accordance with established infection control procedures. A liscense to construct a new environmental station for recycling and waste handeling at Bøylefoss has been granted by the local municipality. The construction work will start as soon as possible.

The figure below shows the power price (NO2) and power generation for Arendals Fossekompani per week for the period 31/12/2019 – 31/03/2021:

AFK generates power at two locations in the Arendal watercourse. The Bøylefoss and Flatenfoss power stations produce in excess of 500 GWh annually. The company is required by law to improve the power plants and associated dam facilities, and consequently AFK 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).

FINANCIAL FIGURES, MNOK	Q1 2021	Q1 2020	Q4 2020	FY 2020
Operating revenue	75	28	25	63
Operating profit	54	7	5	-2
Operating margin	72%	25%	20%	-3%
Earnings before tax (EBT)	54	7	5	-2

AFK Hydropower

Power price & power generation

AFK Parent Company Group Management

AFK Group Management employs 16 people. The head office is located in Arendal.

HIGHLIGHTS OF Q1 2021

Operating profit reflects ongoing operating costs within AFK Group Management. Fluctuations in earnings before tax are primarily due to exchange rate fluctuations and transaction effects.

On 17 February AFK reported that the company sold 16,940,200 shares in Volue AS, representing 11.8% of the share capital. The price per share was NOK 58.50 for total gross proceeds of NOK 991 million. This is reported as an accounting gain of NOK 905 million in the quarter.

On 2 March AFK reported that the company has successfully issued NOK 500 million in unsecured green bonds. The bonds have a 7-year tenor and was priced at a fixed coupon of 2.615%. AFK will use the net proceeds to finance green projects as defined in the AFK Green Bond Framework. The Green Bond Framework has received the best possible rating, Dark Green, by Cicero Shades of Green.

• On 12 March Arendals Fossekompani sold all its shares in Victoria Eiendom and Eiendomsspar for a total of more than NOK 800 million. As the transaction was settled in April, the proceeds are booked as recivables in the balance sheet per 31 March.
• AFK's financial position remains solid. Cash reserves increased during the quarter and as at 31 March amounted to NOK 2,197 million. In the same period the company's equity strengthened by NOK 1,112 million and amounted to NOK 4,495 million as per 31 March. The company also has undrawn credit facilities of NOK 1,780 million as per the end of the quarter.

The AFK Group Management focuses on the development of new sustainable business opportunities, follow-up of portfolio companies through long-term active ownership, power generation, property projects and management of financial investments.

FINANCIAL FIGURES, MNOK	Q1 2021	Q1 2020	Q4 2020	FY 2020
Operating revenue	4	2	0	7
Operating profit	-15	-11	-32	-53
Earnings before tax (EBT)	1 031	-12	412	504
NIBD	-1 552	-311	-400	-400
Equity	4 495	2 899	3 383	3 383
Equity ratio	78%	77%	82%	82%

*The income statement and balance sheet for the AFK parent company as presented in AFK's annual reports cover AFK Group Management and AFK Hydropower.

AFK Group Management

Volue Portfolio company

VOLUE ON TRACK FOR 2021 AND 2025 TARGETS

Volue continued the positive development in the first quarter of 2021 and is on track for the 2021 and 2025 targets and ambitions.

The company sees a strong development on building an continually increased recurring revenue base, where the SaaS-transformation of the company is steadily progressing with a solid development from the corresponding quarter last year. Hence, Volue is on track for the 2025 revenue target of NOK 2 billion in revenues with 80% annual recurring revenues, ARR.

One of the important key development in 2021 was the listing of Volue on the Oslo Stock Exchange. "We're proud to announce that Volue is ready for trading on Oslo Børs following our listing on Euronext Growth last autumn. Volue is focused on securing the availability of the core services societies rely on – from energy, power grid, water to infrastructure - today and tomorrow, and this new milestone will enable us to broaden our investor base and provides a stronger foundation to accelerate structural and organic growth. By being admitted to Oslo Børs, we've achieved one of our 2025 ambitions," said Trond Straume, chief executive officer of Volue, at time of admission for the Oslo Stock Exchange listing.

HIGHLIGHTS OF Q1 2021

• Volue reported revenues of NOK 256 million (227 million) in the first quarter 2021, representing a growth on 13% from the corresponding quarter last year. The growth is following across segments and a successful European expansion is key driver. Adjusted EBITDA was in the same period NOK 52 million (40 million). The profit before tax was NOK 21 million (27 million).
• The growth was especially driven by strong new sales, with increase in annual recurring revenue on 16% compared to Q1-2020. The company has a growth on 49% SaaS revenues from Q1-2020.
• The company expect further growth based on good market outlook and increased focus upon expansion of geographical market.
• The company has relatively little financial impact following from Covid-19.

OUTLOOK

In addition to the NOK 2 billion revenue ambition in 2025, Volue has expressed the following targets: 15% annual organic revenue growth, SaaS revenues increasing to 50%, recurring revenues towards 80% and an adjusted EBITDA margin towards 30%.

Short term, the company has outlined the following priorities:

• Full year revenues > NOK 1 billion (previous guidance of NOK 1 billion in run-rate sales)
• Exceeding 20% in EBITDA margin
• Accelerate growth in ARR through SaaS transformation
• Structural growth take lead position in market consolidation
• Utilise synergies in Volue group to increase operational efficiency

"Following a solid performance in the first quarter of 2021, and all the business development initiatives under development by the entire Volue team, we reiterate our short- and long-term ambitions", Straume concludes.

8

HEADQUARTER	CHAIRMAN
OSLO, NORWAY	ØRJAN SVANEVIK
OWNERSHIP AFK	EMPLOYEES
63.9%	624

COUNTRIES CEO TROND STRAUME Serving more than 2,000 customers in 44 countries, Volue is a global supplier of technology that enables the transition to sustainable energy, power grid and infrastructure markets. With 50 years of green technology expertise, Volue offers software solutions, systems and market insight that optimise production, trading, distribution and consumption of energy, as well as infrastructure and construction projects.

FINANCIAL FIGURES, MNOK	Q1 2021	Q1 2020	Q4 2020	FY 2020
Operating revenue	256	227	240	892
Operating profit	21	24	11	82
Operating margin	8%	11%	5%	9%
Earnings before tax (EBT)	21	27	7	73
Operating cash flow	204	290	89	190
NIBD	-597	-453	-432	-432
Equity	742	383	743	743
Equity ratio	46%	31%	50%	50%

Volue (pro forma figures)

Tekna Holding Portfolio company

OWNERSHIP AFK 80.6%

EMPLOYEES 176

COUNTRIES 4

HEADQUARTER SHERBROOKE, CANADA

CHAIRMAN ØRJAN SVANEVIK CEO MORTEN HENRIKSEN

SOLID TOP-LINE GROWTH FOR TEKNA IN Q1

Tekna had a solid quarter, recording 83% growth in revenue (in local currency) compared to the same quarter in 2020. Growth is mainly driven by new customers and increased powder sales, a trend which is accelerating.

Several milestones were reached during the quarter, including the listing of Tekna Holding AS on Euronext Growth in Oslo in March. Tekna has an ambitious growth strategy and prior to the listing, the company conducted a private placement, raising close to NOK 700 million in new equity. The placement was multiple times oversubscribed and attracted significant interest from high-quality domestic, Nordic and international investors.

Tekna is now scaling up its sales organization and production capacity. In April, the Board of Directors approved a roadmap for capacity increase for the Additive Manufacturing, Printed Electronics and Energy Storage segments, which will raise the company's total number of plasma systems from eight to fourteen. Tekna's plasma systems enable the production of materials with superior performance characteristics to support customers' development, enhance their competitiveness and reduce their environmental footprint.

In the Energy Segment, Tekna signed an agreement in April with the leading Korean chemical company LG Chem for a multi-year joint development program to produce new materials that will improve the storage capacity and the cycle stability of Lithium-Ion batteries. Both companies bring patented technology to the project, which will contribute to meeting the accelerating demand for high-performance Lithium-ion batteries, driven by the growing global need for energy storage.

HIGHLIGHTS OF Q1 2021

• Total operating revenues in the first quarter amounted to NOK 53 million (30 million) and earnings before tax for the quarter totalled NOK -13 million (-23 million)..
• Tekna posted solid revenue growth in the quarter, with good sales performance for both powders and system solutions. Tekna entered 2021 with order books at record levels for deliveries of both systems and powders, and 65% of its overall annual revenue target was secured.
• Sales of powder were up 23% year-on-year, with 85% of sales generated from recurring customers. The company reports positive development in all geographical regions.
• Production facilities operated well in the period, with limited impact from the Covid-19 pandemic. In April the company

commissioned a state-of-the-art powder atomizer for titanium to meet growing demand from the aerospace, medical, and automotive industries.

OUTLOOK

Tekna is well positioned for growth and has a proven track-record of scalability, with 80% recurring sales. Revenues are driven by accelerating adoption of technologies driven by megatrends and increasing market share due to the uniqueness of the materials produced. Tekna can protect its margins due to its scalable business model and high contribution margins, protected by long-term raw material sourcing.

The company has an ambition to grow 2020 materials revenues of CAD ~13 million to a run-rate of CAD ~22 million in 2021. Tekna targets mid- to long-term total revenue CAGR of 40-50%, with an EBITDA margin of around 25%, enabling the company to deliver high returns. For 2030, the company has set the following targets:

• Additive Manufacturing sales will drive Tekna revenues up to CAD 0.5 billion by 2030
• The Printed Electronics segment will generate CAD 0.3 billion by 2030
• The Energy Storage (ES) segment will generate CAD 1.0 billion by 2030

Tekna is a world-leading provider of advanced materials for 3D printing in the aerospace, medical and automotive sectors and is well positioned in the growing market for advanced nanomaterials within the global electronics and batteries industries.

FINANCIAL FIGURES, MNOK	Q1 2021	Q1 2020	Q4 2020	FY 2020
Operating revenue	53	30	62	183
Operating profit	-9	-20	15	-24
Operating margin	-18%	-67%	25%	-13%
Earnings before tax (EBT)	-13	-23	-1	-48
Operating cash flow	-33	-1	30	2
NIBD	-298	275	150	150
Equity	19	26	128	128
Equity ratio	31%	57%	242%	242%

Tekna Holding AS

NSSLGlobal Portfolio company

OWNERSHIP AFK 80%

EMPLOYEES 205

HEADQUARTER
SURRE Y, UK

CHAIRMAN ARILD NYSÆTHER

CEO SALLY-ANNE RAY

HIGHLIGHTS OF Q1 2021

• Total operating revenues in the first quarter amounted to NOK 210 million (235 million) and earnings before tax came in at NOK 29 million (47 million).
• Decreased revenues and earnings compared with the first quarter of 2020, are largely due to a high-margin short-term extension to one customer contract and an end-of-contract with another customer the previous year.
• NSSLGlobal won 4 out of 5 tenders in the first quarter. Half of these are governmental engineering projects which will be rolled out in 2021 and 2022.
• NSSLGlobal opened a service and sales office near Gothenburg, Sweden to pursue Scandinavian governmental and maritime industry opportunities.

OUTLOOK 2021

NSSLGlobal expects 2021 revenues to be in line with 2020, while operating profit is expected to weaken due to a contract in 2020 that had particularly good margins.

NSSLGlobal is an independent provider of satellite 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 three main areas: Airtime, Hardware and Service. Its main customers are within the maritime segment, the military and government sector, large international corporations and the oil and gas industry.

FINANCIAL FIGURES, MNOK	Q1 2021	Q1 2020	Q4 2020	FY 2020
Operating revenue	210	235	237	898
Operating profit	29	47	44	162
Operating margin	14%	20%	19%	18%
Earnings before tax (EBT)	29	47	37	154
Operating cash flow	27	71	21	166
NIBD	-295	-306	-274	-274
Equity	449	428	424	424
Equity ratio	55%	50%	56%	56%

Cogen Energia Portfolio company

OWNERSHIP AFK 100%

EMPLOYEES 98

HEADQUARTER
MADRID, SPAIN

CHAIRMAN MORTEN BERGESEN

CEO ANTONIO QUILEZ Cogen Energia operates its own and third-party cogeneration power plants in Spain. The company uses surplus heat from gas-based electricity generation to produce heat, steam or cooling for industrial partners. The power produced is sold on the physical power market on an ongoing basis. Public subsidies are provided in the form of an operating bonus and an investment bonus per MWh produced.

HIGHLIGHTS OF Q1 2021

• Total operating revenues in the first quarter amounted to NOK 131 million (174 million) and consolidated earnings before tax came in at NOK 4 million (1 million).
• Prices on produced electricity have been very volatile during the quarter, from very high in January, to record low in February and increasing again in March. Low prices in February reduced the number of running hours significantly, lowering revenues for the entire quarter.
• The price of gas, which is the company's most significant cost factor, was higher than expected throughout the quarter. The company's plants operated well during the quarter.
• Cogen Energia signed an eight-year extension of a contract with an industrial customer.

• Through its operations Cogen Energia plays a key part in the green shift in the Spanish power market. Rapid development of the market presents new growth opportunities. AFK has started a strategic process to assess how Cogen Energia can be best positioned to take advantage of these opportunities going forward.

OUTLOOK 2021

Cogen Energia's revenues and operating profit in 2021 are expected to be on a par with 2020.

FINANCIAL FIGURES, MNOK	Q1 2021	Q1 2020	Q4 2020	FY 2020
Operating revenue	131	174	156	516
Operating profit	5	2	17	27
Operating margin	4%	1%	11%	5%
Earnings before tax (EBT)	4	1	14	21
Operating cash flow	77	-3	148	123
NIBD	74	168	119	119
Equity	176	202	175	175
Equity ratio	288%	325%	307%	307%

Cogen Energia

EFD Induction Portfolio company

OWNERSHIP AFK 98.7%

EMPLOYEES 971

COUNTRIES

17

HEADQUARTER SKIEN, NORWAY CHAIRMAN ØRJAN SVANEVIK

CEO BJØRN E. PETERSEN EFD Induction delivers advanced green power technology based on induction technology throughout the world. Group activities are concentrated in three activity areas: Induction Heating Machines (IHM), Induction Power Systems (IPS) and Spares and Service (SAS). Its main customers are in the automotive industry, wind turbines, pipe production, the electronics industry, the cable industry and mechanical engineering.

HIGHLIGHTS OF Q1 2021

• Total operating revenues in the first quarter amounted to MNOK 267 (257 million) and earnings before tax for the quarter totalled MNOK -1 (–15 million).
• Operating revenues for the EFD Induction in the quarter were higher than corresponding quarter previous year but are still characterized by lower activity within the automotive industry due to Covid-19 related restrictions in Europe.
• The order intake remains strong for the company. Following the record high order intake in the fourth quarter, the order intake in the first quarter was also good, primarily due to orders from the automotive industry in Asia and the welding industry in North America.

• Operating profit improved in the quarter, mainly due to reduced costs and restructuring measures implemented in 2020. Additional effects from implemented measures will be effective during the first half of 2021. The market situation is expected to gradually improve through 2021, but the market is still characterized by a significant degree of uncertainty.
• In December EFD Induction sold the property Bølevegen 4b in Skien to AFK. As a result of this transaction the company posted an accounting gain of MNOK 27 on the sale of the property in the previous quarter.

OUTLOOK 2021

Adjusted for extraordinary income from a property sale in 2020, EFD Induction revenues and operating profit in 2021 are expected to be higher than in 2020.

FINANCIAL FIGURES, MNOK	Q1 2021	Q1 2020	Q4 2020	FY 2020
Operating revenue	267	257	345	1150
Operating profit	3	-11	46	41
Operating margin	1%	-4%	13%	4%
Earnings before tax (EBT)	-1	-15	45	30
Operating cash flow	1	18	85	68
NIBD	68	99	52	52
Equity	374	354	374	374
Equity ratio	37%	32%	35%	35%

EFD Induction

AFK Property

HIGHLIGHTS OF Q1 2021

Apartment sales for Bryggebyen's first phase of construction were at a stable good level throughout 2020 and were particularly good towards the year-end. To satisfy the market a decision was made in August to expand the current build phase by a further 31 apartments. Of the new total of 113 apartments, 76 had been sold at the beginning of April 2021. Construction is proceeding according to plan, with all the apartments in the expanded phase expected to be ready for occupancy after the summer of 2021.

In December, AFK Property purchased the property Bølevegen 4B in Skien from portfolio company EFD Induction. The property is an industrial building with an area of 4,700 sqm on a 12,000 sqm plot. The building is on a long-term lease to EFD Induction.

AFK has various property investments, mainly in the Arendal area. Vindholmen Eiendom AS represents the largest development project, in which the former Vindholmen wharf is being developed for combined residential and commercial use under the name Bryggebyen.

Shares and shareholders

Following the share split on 20 November 2020, with each share in AFK being split into 25 shares, there are now a total of 55,995,250 shares in the company. As at 31 March a total of 1,108,700 were treasury shares. In the first quarter 747,746 shares were traded, representing 1.3% of the total number of shares.

The share price on 31 December was NOK 184 and on 31 March NOK 270.

Risk and uncertainties

AFK is exposed to credit risk, market risk and liquidity risk. These matters are described in detail in Note 16 to the annual financial statements for 2020.

Related party transactions

The company's related parties comprise subsidiaries, associates and members of the Board of Directors and executive management. Transactions between AFK companies and other related parties are based on the principles of market value and arm's length distance. Transactions carried out between related parties are detailed in Note 4. None of these transactions are considered of material importance for the company's financial position or earnings.

Individual Board members and senior executives at AFK bought shares in the company during the quarter. For more details see the published stock market notifications.

Outlook

All the portfolio companies have high activity levels. Revenues and earnings for AFK as a whole is expected to be better in 2021 than in 2020. However, there remains considerable uncertainty associated with the Covid-19 pandemic and the future development of energy prices.

AFK HYDROPOWER

In view of the market's estimated energy price trend for 2021, revenues and operating profit for AFK Hydropower are expected to be considerably higher in 2021 than in 2020. Actual energy prices will however depend on many factors, including oil and gas prices, weather conditions, temperatures etc.

VOLUE

Volue's revenues and operating profit for 2021 are expected to be higher than in 2020.

TEKNA

Tekna's revenues and operating profit in 2021 are expected to be higher than in 2020.

NSSLGLOBAL

NSSLGlobal expects 2021 revenues to be in line with 2020, while operating profit is expected to weaken due to a contract in 2020 that had particularly good margins.

COGEN ENERGIA

Cogen Energia's revenues and operating profit in 2021 are expected to be on a par with 2020.

EFD INDUCTION

Adjusted for extraordinary income from a property sale in 2020, EFD Induction revenues and operating profit in 2021 are expected to be higher than in 2020.

The Board of Directors emphasises that significant uncertainty is associated with assessments of future circumstances and that the Covid-19 pandemic gives rise to particularly great uncertainty.

Froland, 6 May 2021

The Board of Directors, Arendals Fossekompani ASA

Consolidated balance sheet

Amount in MNOK		2021		2020
	Note	Q1	Q1	FY
Assets
Fixed assets		1 162	1 296	1 199
Intangible assets and goodwill		999	848	979
Investment in equity companies		8	-	9
Net pension assets		27	23	16
Non-current receivables and investments		422	253	395
Deferred tax assets		121	136	150
Non-current assets		2 739	2 556	2 749
Inventories		725	566	681
Contract assets		199	129	161
Total receivables		1 710	1 000	893
Cash and cash equivalents		4 028	1 653	1 758
Financial assets at fair value through OCI		7	566	735
Financial assets clas. as held for trading		10	10	10
Assets connected to discontinued operation	6	-	125	-
Current assets		6 678	4 048	4 238
Total assets		9 417	6 604	6 987
Equity and liabilities
Common stock		224	224	224
Other paid in capital		8	6	8
Own shares		-64	-66	-64
Other reserves		40	622	704
Retained earnings		4 811	2 124	2 680
Owner's equity		5 019	2 909	3 553
Minority Interest		518	150	303
Total equity	8	5 536	3 059	3 856
Bond		497	300	-
Interest and ex rate swap		-	157	-
Non-current borrowings		511	526	500
Employee benefits		33	41	26
Provisions		125	80	111
Deferred taxes		74	62	61
RoU liabilities, non-current		162	226	184
Non-current liabilities		1 403	1 392	883
Bond		300	-	300
Interest and ex rate swap		88	-	107
Interest-bearing current borrowings		73	141	90
Bank overdraft		338	142	310
Accounts payable		698	1 055	708
Payable income tax		59	85	54
Contract liabilities		340	283	153
RoU-liabilities, current		55	62	58
Other current liabilities		526	255	470
Liabilities connected to discontinued operation	6	-	94	-
Current liabilities		2 478	2 153	2 249

Amount in MNOK		2021	2020
	Note	Q1	Q1	FY
Assets
Fixed assets		1 162	1 296	1 199
Intangible assets and goodwill		999	848	979
Investment in equity companies		8	-	9
Net pension assets		27	23	16
Non-current receivables and investments		422	253	395
Deferred tax assets		121	136	150
Non-current assets		2 739	2 556	2 749
Inventories		725	566	681
Contract assets		199	129	161
Total receivables		1 710	1 000	893
Cash and cash equivalents		4 028	1 653	1 758
Financial assets at fair value through OCI		7	566	735
Financial assets clas. as held for trading		10	10	10
Assets connected to discontinued operation	6	-	125	-
Current assets		6 678	4 048	4 238
Total assets		9 417	6 604	6 987
Equity and liabilities
Common stock		224	224	224
Other paid in capital		8	6	8
Own shares		-64	-66	-64
Other reserves		40	622	704
Retained earnings		4 811	2 124	2 680
Owner's equity		5 019	2 909	3 553
Minority Interest		518	150	303
Total equity	8	5 536	3 059	3 856
Bond		497	300	-
Interest and ex rate swap		-	157	-
Non-current borrowings		511	526	500
Employee benefits		33	41	26
Provisions		125	80	111
Deferred taxes		74	62	61
RoU liabilities, non-current		162	226	184
Non-current liabilities		1 403	1 392	883
Bond		300	-	300
Interest and ex rate swap		88	-	107
Interest-bearing current borrowings		73	141	90
Bank overdraft		338	142	310
Accounts payable		698	1 055	708
Payable income tax		59	85	54
Contract liabilities		340	283	153
RoU-liabilities, current		55	62	58
Other current liabilities		526	255	470
Liabilities connected to discontinued operation	6	-	94	-
Current liabilities		2 478	2 153	2 249
Total liabilities and equity		9 417	6 604	6 987

Amount in MNOK		2021		2020
	Note	Q1	Q4	Q1	FY
Continuing operations
Sales revenues	7	994	1 018	946	3 618
Total other Income		6	11	5	56
Sales		1 000	1 029	951	3 673
Cost of sales		367	407	387	1 437
Total staff cost		362	396	338	1 360
Total other operating cost	2	128	85	121	429
Operating expense		857	888	846	3 226
EBITDA		143	141	105	447
Depreciation	2	44	46	55	189
Amortisation		17	15	16	62
Impairment loss from PPE	3	-	8	-	9
Operating profit		83	72	34	188
Finance income and finance costs
Total finance income		27	4	47	59
Finance cost	3	28	7	89	112
Net financial items		-1	-3	-42	-53
Equity company income		-2	-14	-	-14
Profit before income tax		79	55	-8	121
Provision for income tax		47	16	2	39
Profit for the period, continuing operations		32	39	-10	81
Profit (-loss) from discontinued operation	6	-	-0	2	39
Profit for the period		32	38	-9	120
Attributable to:
Minority interest income		19	19	9	58
Equity holders of the parent		13	19	-17	62
Basic/diluted earnings per share (NOK)	22	0,59	0,70	-0,16	2,19
Statement of comprehensive income
Total Effect from Foreign Exchange		-13	-53	134	18
Change on Cash flow hedges		8	-8	-49	-27
Tax on OCI that may be reclassified to P&L		-0	-3	9	-2
OCI that may be reclassified to P&L		-5	-63	94	-11
Change in financial assets at fair value through OCI		96	77	-330	-162
Actuarial gains and Losses		0	4	-	4
Tax on OCI that will not be reclassified to P&L		-	8	-	8
OCI that will not be reclassified to P&L		96	90	-330	-150
Total Other Comprehensive Income (OCI)		91	26	-235	-161
Profit for the period		32	38	-9	120
Total Comprehensive Income		123	65	-244	-41
Attributable to:
Minority Interest		6	14	20	58
Equity holders of the parent		118	51	-264	-99
Total Comprehensive Income per share (NOK)		2.25	1.18	-4.45	-0.74

Consolidated statement of profit or loss

Consolidated statement of cash flows

Amount in MNOK

		2021	2020
	Note	Q1	Q1
Cash flow from operating activities
Net Cash from Income		32	-10
Adjusted for
Depreciation, Impairment and Amortization		61	73
Net financial items		1	42
Equity company income		2	-
Tax expense		47	2
Total after adjustments to net income		143	107
Change in Inventories		-46	-54
Change in trade and other receivables		-27	43
Change in trade and other payables		-36	331
Change in other current assets		-37	-8
Change in other current liabilities		280	-41
Change in other provisions		27	-9
Change in employee benefits		-2	-1
Total after adjustments to net assets		303	367
Tax paid		-19	-47
Net cash from operating activities	A	284	320
Cash flow from investing activities
Interest received etc.		6	5
Dividends received		-	3
Purchase of PPE and intangible assets		-53	-40
Purchase of other investments		-44	-1
Proceed from sale of other investments		3	2
Purchase of shares in subsidiaries		-5	-56
Proceeds from the sales of shares in subsidiaries		982	40
Net cash from investing activities	B	888	-47
Cash flow from financing activities
Cash Flow from Issue Of Stock		651	-
New long-term borrowings		503	182
Repayment of long-term borrowings		-49	-8
Cash Flow from Net change in current interest bearing debt		59	3
Interest paid etc.		-15	-16
Dividend paid		-38	-15
Net cash from financing activities	C	1 110	147
Cash Flow	A+B+C	2 282	419
Opening Balance for Cash asset		1 758	1 172
Total effect from FX on non-Cash accounts		-13	62
Closing Balance for Cash asset		4 028	1 653

		2021		2020
	Note	Q1	Q4	Q1	FY
Sales revenues	7	75	22	27	60
Total other Income		4	4	2	10
Sales		79	25	29	70
Cost of sales		1	3	1	6
Total staff cost		18	34	11	65
Total other operating cost	2	19	13	19	44
Operating expense		38	50	31	115
EBITDA		42	-24	-2	-45
Depreciation	2	3	2	2	9
Amortisation		0	0	0	1
Impairment loss from PPE	3	-	-	-	-
Operating profit		38	-27	-4	-55
Finance income and finance costs
Total finance income		1 063	440	98	622
Finance cost	3	16	-4	76	64
Net financial items		1 047	443	23	557
Profit before taxes		1 085	417	18	502
Provision for income tax		31	-0	-5	-18
Profit for the period		1 054	417	24	520
Attributable to:
Equity holders of the parent		1 054	417	24	520
Basic/diluted earnings per share (NOK)		19.21	7.60	0.44	9.48
Statement of comprehensive income
Change in financial assets at fair value through OCI		96	77	-330	-162
Actuarial gains and Losses		-	5	-	5
Tax on OCI that will not be reclassified to P&L		-	-1	-	-1
OCI that will not be reclassified to P&L		96	81	-330	-158
Total Other Comprehensive Income (OCI)		96	81	-330	-158
Changes in Net Income		1 054	417	24	520
Total Comprehensive Income		1 150	498	-306	362
Attributable to:
Equity holders of the parent		1 150	498	-306	362
Total Comprehensive Income per share (NOK)		20,96	9,07	-5,58	6,59

Statement of profit or loss Parent Company

Amount in MNOK

Balance sheet Parent Company

Amount in MNOK

	2021	2020
Note	Q1	Q1	FY
Assets
Fixed assets	173	162	172
Intangible assets and goodwill	12	7	12
Net pension assets	10	6	10
Non-current receivables and investments	227	212	227
Deferred tax assets	71	76	84
Non-current assets	2 385	2 436	2 442
Contract assets	-	1	-
Total receivables	1 137	106	158
Cash and cash equivalents	2 198	664	766
Financial assets at fair value through OCI	7	566	735
Financial assets clas. as held for trading	-	-	-
Assets connected to discontinued operation 6	-	-	-
Current assets	3 342	1 337	1 659
Total assets	5 728	3 773	4 101
Equity and liabilities
Common stock	224	224	224
Other paid in capital	8	6	8
Own shares	-64	-66	-64
Other reserves	2	535	703
Retained earnings	4 326	2 201	2 512
Owner's equity	4 495	2 899	3 383
Minority Interest	-	-	-
Total equity	4 495	2 899	3 383
Bond	497	300	-
Interest and ex rate swap	-	157	-
Non-current borrowings	219	296	217
Employee benefits	6	8	7
Provisions	-	-	-
Deferred taxes	-	-	-
RoU liabilities, non-current	16	5	17
Non-current liabilities	739	766	241
Bond	300	-	300
Interest and ex rate swap	88	-	107
Interest-bearing current borrowings	-	-35	-
Accounts payable	34	20	18
Payable income tax	22	35	7
RoU-liabilities, current	3	1	4
Other current liabilities	18	19	13
Current liabilities	494	108	477
Total liabilities and equity	5 728	3 773	4 101

Statement of cash flows Parent Company

Amount in MNOK

		2021	2020
	Note	Q1	Q1
Cash flow from operating activities
Net Cash from Income		1 054	24
Adjusted for
Depreciation, Impairment and Amortization		3	2
Net financial items		-1 047	-23
Tax expense		31	-5
Total after adjustments to net income		42	-2
Change in trade and other receivables		-5	-3
Change in trade and other payables		16	-4
Cash flow form Internal Accounts Payable and Receivable		6	12
Change in other current assets		-	-
Change in other current liabilities		1	-0
Change in other provisions		-	-
Change in employee benefits		-1	-1
Total after adjustments to net assets		58	3
Tax paid		-3	-25
Net cash from operating activities	A	55	-22
Cash flow from investing activities
Interest received etc.		1	3
Dividends received		-	60
Purchase of PPE and intangible assets		-3	-0
Purchase of other investments		-1	-0
Proceeds from the sales of shares in subsidiaries		1 133	-
Net cash from investing activities	B	1 130	63
Cash flow from financing activities
New long-term borrowings		497	150
Repayment of long-term borrowings		-1	-0
Cash Flow from Internal Loans and Borrowings		-206	-22
Interest paid etc.		-4	-3
Dividend paid		-38	-
Net cash from financing activities	C	247	124
Cash Flow	A+B+C	1 432	165
Opening Balance for Cash asset		766	499
Closing Balance for Cash asset		2 198	664

Notes to interim report for Q1 2021

Note 1 Confirmation of financial framework

The financial statements for the quarter have been prepared in accordance with IAS 34 Interim Financial Reporting. The report does not include all the information required in full annual financial statements and should be read in conjunction with the consolidated financial statements for 2020.

Note 4 Related party transactions

Disclosures concerning related party transactions are given in the company's Annual Report for 2020, Note 24.

Note 5 Parent company gain from sell-down in Volue AS and listing of Tekna Holding AS

AFK sold down 11,8% share in Volue AS in January, resulting in a gain in the AFK parent company of NOK 904 million. In March, Tekna Holding was listed on Euronext Growth, resulting in a gain in AFK parent company of NOK 138 million. Total gain of NOK 1,042 million is eliminated in consolidated profit but is shown as paid-in capital in Note 8 Equity.

Note 2 Key accounting policies

The accounting policies for 2020 are described in the Annual Report for 2020. The financial statements have been prepared in accordance with EU-approved IFRSs and associated interpretations, as well as the additional Norwegian disclosure requirements pursuant to the Norwegian Accounting Act and stock exchange regulations and rules, applicable as at 31 December 2020. The same policies have been applied in the preparation of the interim financial statements as at 31 March 2021.

New standards effective from 1 January 2021 have had no material effect on the financial statements.

Note 3 Estimates

Areas involving significant use of estimates include the valuation of companies in the share portfolio and measurement of goodwill/excess values in subsidiaries and associates, and of impairment indicators for property, plant and equipment and intangible assets. In the year to date these measurements have not resulted in impairment losses on any assets or cash-generating units.

Individual companies in the Group have utilised government assistance on standard terms in the countries where they are represented. The assistance differs from country to country and is mainly given in the form of direct grants for operations, amounting to approximately NOK 31 million in 2020. In 2021 the Group has not received any grants connected to the Covid-19 pandemic.

In view of the ongoing Covid-19 pandemic, the Board of Directors and executive management of AFK have taken strong measures to safeguard employees, partners and customers of the portfolio companies. Measures have also been taken to limit negative financial and operational effects, and to ensure that the companies' liquidity is robust.

Based on the Group's strong financial position, AFK stands firm in the extraordinary situation that the world is currently in as a result of the Covid-19 pandemic.

Note 6 Sale of subsidiary

Amount in MNOK

In August 2020 Arendals Fossekompani's subsidiary Scanmatic sold its 51% shareholding in Scanmatic Elektro. Consequently, the company's financial figures have been recognised on separate lines in the income statement and balance sheet as discontinued operations.

The gain on disposal of Scanmatic Elektro of MNOK 32 is included in "Profit/loss from discontinued operations".

Scanmatic Elektro's key figures relating to the income statement and balance sheet for 2020 are presented below.

Operating revenues and operating costs

	Q1 2020	Full year 2020
Operating revenues and operating costs
Sales	77	181
Operating expense EBITDA	74	168
Depreciation	2	4
Operating profit	2	10
Net financial items	-0	-0
Profit before taxes	2	9
Provision for income tax	0	2
Net discontinued operations income	2	7
Profit from the sale of Scanmatic Elektro		32
Net discontinued operations income (after tax)	2	39
Basic earnings per share / diluted earnings per share (NOK)	0,03	0,71

Balance sheet

Non-current assets	18
Current assets	107
Assets connected to discontinued operation	125
Non-current liabilities	11
Current liabilities	83
Liabilities connected to discontinued operation	94

	Common stock	Other paid in capital	Own shares	Other reserves	Retained earnings	Owner's equity	Minority Interest	Total equity
2020
Opening balance at 01.01	224	6	-67	868	2 146	3 177	142	3 318
Net Profit for the Period	-	-	-	-	-18	-18	10	-9
Total Other Comprehensive Income (OCI)	-	-	-	-246	1	-245	10	-235
Own shares	-	0	0	-	-	0	-	0
Other changes from DS	-	-	-	-	-3	-3	3	-0
Dividends paid	-	-	-	-	-0	-0	-15	-15
Closing balance at 31.03	224	6	-66	622	2 124	2 909	150	3 059
2021
Opening balance at 01.01	224	8	-64	743	2 637	3 548	307	3 855
Net Profit for the Period Total Other Comprehensive Income (OCI)	- -	- -	- -	- 94	23 0	23 94	9 -3	32 91
Own shares	-	0	0	-	-	0	-	0
Sale of minority interests wit hout a change in controll	-	-	-	-	1 391	1 391	205	1 596
Realization of financial asset at fair value through OCI	-	-	-	-798	798	-	-	-
Other changes from DS	-	-	-	-	-	-	0	-
Dividends paid	-	-	-	-	-38	-38	-	-38
Closing balance at 31.03	224	8	-64	40	4 811	5 019	518	5 536

Note 8 Consolidated statement of changes in equity

Amount in MNOK

5

	HYDROPOWER		GROUP MNGT		VOLUE		NSSLGLOBAL		EFD INDUCTION
	2021	2020	2021	2020	2021	2020	2021	2020	2021	2020
Total sales at a point in time	75	27	-	-	43	42	208	233	139	235
Total sales over time	-	-	-	-	213	184	-	-	127	20
Total other Income	0	0	4	2	0	1	2	2	1	1
Sales	75	28	4	2	256	227	210	235	267	257
Operating expense	20	19	18	13	214	186	171	167	250	252
Total depreciation, amortization and impairment	2	2	1	0	21	16	10	21	13	15
Operating profit	54	7	-15	-11	21	24	29	47	3	-11
Net financial items	-	-	1 047	23	-0	3	-1	-0	-4	-4
Provision for income tax	26	5	5	-10	7	2	7	10	2	-1
Continuing operations income	28	2	1 026	22	14	25	22	37	-3	-14
Total assets	231	141	5 497	3 631	1 605	1 226	816	861	1 017	1 104
Total liabilities	42	64	1 190	810	863	842	366	433	643	750
Net interest bearing debt	-	-	-1 552	-311	-597	-453	-295	-306	68	99

Note 7 Segment reporting per 31.03

Amount in MNOK

	TEKNA HOLDING		COGEN ENERGIA		PROPERTY *		ELIMINATIONS		TOTAL
	2021	2020	2021	2020	2021	2020	2021	2020	2021	2020
Total sales at a point in time	28	25	131	174	7	1	1	-	632	737
Total sales over time	23	5	-	-	-	-	-	-	362	209
Total other Income	2	0	-	-	3	1	-5	-2	6	5
Sales	53	30	131	174	10	2	-5	-2	1 000	951
Operating expense	55	43	122	167	10	3	-2	-2	857	846
Total depreciation, amortization and impairment	7	8	5	5	3	2	-2	2	61	71
Operating profit	-9	-20	5	2	-4	-3	-0	-2	83	34
Net financial items	-4	-3	-1	-1	-0	-1	-1 041	-58	-4	-42
Provision for income tax	-	-3	-	0	0	-0	0	-0	47	2
Continuing operations income	-13	-20	4	1	-4	-4	-1 041	-59	32	-10
Total assets	1 065	396	613	715	759	424	-2 185	-1 895	9 417	6 604
Total liabilities	480	370	436	514	506	231	-646	-469	3 880	3 545
Net interest bearing debt	-298	275	74	168	369	150	0	-0	-2 231	-378

* Property includes Vindholmen Eiendom, Bedriftsveien 17, Steinodden Eiendom, Arendal lufthavn Gullknapp, Songe Træsliperi, AFK Property & Alytic.

Arendals Fossekompani

ARENDALS FOSSEKOMPANI

Developing green-tech companies

Visiting

Arendals Fossekompani ASA Langbryggen 9 4841 Arendal Norway

Post

36

Postboks 280 4803 Arendal

Contact

Tlf: +47 37 23 44 00 firmapost@arendalsfoss.no www.arendalsfossekompani.no

Investor contact

Lars Peder Fensli, CFO lars.peder.fensli@arendalsfoss.no Tlf: +47 953 63 670

Production

Arendals Fossekompani's Interim Report Q1 2021 has been produced by Group Finance and Group Communication

Design and layout Mission AS