Interim report
Q4 2020
Key figures, AFK Consolidated
Operating Revenues (MNOK)
Operating Profit (MNOK)
Earnings before tax (MNOK)
Q 4 Q 4 Full year Full year
2 0 2 0 2 0 1 9 2 0 2 0 2 0 1 9
MNOK
Operating Revenues 1 014 1 198 3 658 4 496
Operating Profit 71 68 187 233
Operating Margin 7 % 6 % 5 % 5 % Operating profit per unit Arendals Fossekompani ASA -27 40 -55 120
Volue (proforma) 12 4 83 40
NSSLGlobal 40 38 159 162
EFD Induction 46 2 41 -14
Tekna 19 -13 -8 -41
Cogen 17 4 27 -4
Øvrig virksomhet -35 -8 -60 -31
Operating Profit 71 68 187 233
Earnings before tax (EBT) 53 70 119 244
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 – Q4 2020
(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 MNOK 1,014 (MNOK 1,198) in the fourth quarter and as at 31 December to MNOK 3,658 (MNOK 4,496). Consolidated earnings before tax came in at MNOK 53 (MNOK 70) for the quarter and as at 31 December amounted to MNOK 119 (MNOK 243). Ordinary profit after tax but before non-controlling interests totalled MNOK 48 (MNOK –23) for the quarter and as at 31 December amounted to MNOK 130 (MNOK 47).
Other comprehensive income amounted to MNOK 13 (MNOK 145) for the quarter and as at 31 December to MNOK –174 (MNOK 233). The differences compared with the previous year primarily relate to the change in the value of financial investments (MNOK –162). The Group’s comprehensive income for the quarter came in at MNOK 61 (MNOK 122) and as at 31 December amounted to MNOK –44 (MNOK 270).
Despite historically low energy prices, albeit increasing in December, AFK delivered a good result in the fourth quarter and increased earnings after tax from MNOK 47 in 2019 to MNOK 130 in 2020. All the portfolio companies reported a very good improvement in earnings during the period. AFK also completed various structural and strategic actions in the quarter, including the listing of Volue on Euronext Growth, the establishment of Alytic, the acquisition of Kontali, investment in Beyonder and a split of the AFK share.
Volue and Tekna delivered particularly solid revenue growth when compared year on year. Volue is reporting revenue growth of 17% in the quarter along with a sound order intake. Tekna is experiencing increased activity in the market, resulting in good growth in powder sales. There is also growing interest in nanosilicon deliveries for future battery technology. As announced previously, Tekna and global industrial group Aperam have established a joint venture called ImphyTek Powders that will specialise in the production and sale of metal powders for 3D printing based on nickel-based alloys. During the quarter ImphyTek Powders established its operational activities, thereby contributing to Tekna’s positive results. In the financial statements ImphyTek is reported as an associate of Tekna.
Weaker revenues in the quarter for AFK overall are primarily due to low energy prices, which meant that revenue was weak for Cogen and AFK Hydropower. As communicated previously, Cogen terminated a major unprofitable customer relationship at the start of the year.
In 2019 this contract generated revenue in the order of MNOK 600.
All the portfolio companies delivered good profits for the quarter as a result of high activity levels. In addition, EFD Induction is reporting order intake at a record high during the period, driven primarily by deliveries for wind turbine production. Meanwhile operating profit for the quarter was negatively impacted by low energy prices and associated negative operating profit in the AFK parent company.
The return on financial investments in the quarter was 12%, amounting to MNOK 81. The return for the year to date is –18%, corresponding to MNOK –162, mainly due to falls in the price of property shares as a result of the Covid-19 pandemic. The unrealised portion of the return on the financial investments is reported in other comprehensive income.
On 19 October AFK announced that Volue AS was to be listed on Euronext Growth (formerly Merkur Market). In connection with this AFK realised MNOK 520 from a sell- down of shares in the company, which was reported in the AFK parent company as a gain of MNOK 440 in the quarter.
At the end of the year AFK holds around 76% of the shares in Volue.
Interim report Q4 2020
On 30 October AFK announced the purchase of 71% of the shares in Kontali Analyse and the establishment of new growth company Alytic. Alytic’s purpose is to transform a broad spectrum of data-driven companies in various sectors and form a basis for a new growth area at AFK.
On 7 December AFK reported its participation in a private placement by Norwegian battery technology company Beyonder. This strengthens AFK’s position within the development of the batteries of the future and large industrial storage solutions for renewable power generation.
At an Extraordinary General Meeting on 19 November AFK approved a share split in which each share in the company was split into 25 shares. The shares were listed post-split with a new nominal value on 20 November.
The AFK parent company had a positive cash position at the end of the quarter and the company’s financial capacity is sound. During the quarter the company’s equity was bolstered by MNOK 464 and at 31 December stands at MNOK 3,383.
EVENTS AFTER THE CLOSE OF THE QUARTER
The Board of Directors decided to pay a cash dividend of NOK 0.70 per share for the fourth quarter 2020. The dividend is set to be paid on 24 February.
As previously communicated, Volue is aiming to be moved to the main list of the Oslo Stock Exchange during 2021.
Preparatory work is under way with the aim of listing during the second quarter. In advance of any stock market listing the company will hold a general meeting to convert the company into a public limited company (ASA), which will involve changing the composition of the company’s Board of Directors.
Based on successful industrialisation of the powder operations for additive manufacturing (3D printing), going forward Tekna hopes to accelerate the development of other segments including nanomaterials for electronics and batteries. In light of this AFK has started assessing the financial options open to the company in the future, including possible listing or partnership.
Through its operations Cogen is playing a key part in the green shift in the Spanish power market. Rapid development of the market is bringing new growth opportunities for the company. AFK has started a strategic process to assess how Cogen can be best positioned to take advantage of these opportunities going forward.
AFK has begun to prepare for issuing a green bond. The potential bond will be used to refinance AFK’s outstanding AFK01 bond and to finance new green, sustainable investments. The bond has been assessed by CICERO and will be classified as dark green in its “Shades of Green”
system.
OUTLOOK FOR 2021
The average power price for price area NO2 in January was NOK 0.499/kWh, five times higher than the average spot prices in 2020. In view of the market’s estimated power price trend for 2021, revenues and operating profit for AFK Hydropower are expected to be considerably better in 2021 than in 2020.
All the portfolio companies have high activity levels, with revenues and earnings for AFK as a whole in 2021 expected to be equal to or better than results for 2020. However, there remains considerable uncertainty associated with the Covid-19 pandemic and the future development of energy prices.
SHARE PRICE
Following the share split on 20 November, in which each share was split into 25 shares, there are now a total of 55,995,250 shares in the company. The share price on 30 September was NOK 159 and on 31 December was NOK 184, an increase of 16% in the quarter. The trading volume in the fourth quarter was in the order of 825,000 shares, more than four times higher than the average quarterly trading volume in 2019. The share price reached its highest ever level in the fourth quarter at NOK 191, corresponding to market capitalisation of NOK 10.5 billion.
On 19 October 2020 Volue AS was admitted to trading on Euronext Growth (formerly Merkur Market) and has completed its first quarter as a listed company. Volue is continuing to integrate the four companies Markedskraft, Wattsight, Powel and Scanmatic, and at the start of 2021 rebranded all the companies in the group as Volue.
“The listing of Volue represents an important step in our growth strategy and we see a unique opportunity to take a leading position in the shift from fossil to renewable energy production. Volue has big ambitions and wants to use the capital market to accelerate its growth and play a part in the consolidation of the industry,” says Trond Straume, CEO of Volue.
In November 2020 Volue AS bought the German company Likron GmbH. Likron is a leading service provider in algorithmic intraday energy trading on the European Power Exchange (EPEX) and Nord Pool. With its head office in Munich, Germany, the company was established in 2010 and today has 30 employees. Likron will function as Volue’s centre of excellence for energy market trading solutions.
“We are very pleased to announce the acquisition of Likron, which will strengthen our offering in software for power trading in Europe. The Likron team pioneered
VOLUE (pro forma figures)
algorithmic trading on the European Power Exchange, and the products and services it offers complement Volue’s product portfolio excellently. By combining our companies we hope to be at the technological forefront in a market that is experiencing both radical change and strong growth,” says Straume.
Volue delivered solid operating profit and performed well again in the fourth quarter, despite the uncertain conditions in the market caused by Covid-19. The market outlook remains good for the company’s three business areas due to an ever-increasing need for new digital solutions in the industry verticals where Volue operates.
Volue provides products and services for critical infrastructure, involving solutions that must be operational 24 hours a day.
The company sees good opportunities to secure further profitable growth and hopes to develop its business both organically and structurally. The global market needs large, integrated suppliers in order to add greater value for customers.
Volue is working towards being moved to the main list of Oslo Stock Exchange during 2021. Preparations are under way, with the aim of listing during the second quarter.
Solid top-line growth of 17% for Volue in Q4
- Total operating revenues in the fourth quarter amounted to MNOK 240 (MNOK 206) and as at 31 December to MNOK 892 (MNOK 798). In the same period consolidated earnings before tax increased to MNOK 8 (MNOK 5) and as at 31 December were MNOK 74 (MNOK 34).
- Revenues continued to develop well in the fourth quarter and the company is reporting very solid growth compared with the same period in 2019. The growth is a result of positive sales performance through new customers outside the Nordic region and a home market that remains strong. Volue’s three business areas all report sound growth in earnings.
The company is continuing to grow annual recurring revenue (ARR), with a 17% increase in the quarter. In the fourth quarter ARR accounted for 70% of the company’s revenues.
- The company also expects further growth ahead due to good market prospects.
- In 2020 a total of MNOK 18 was charged to the cost base in extraordinary costs associated with the establishment and integration of the Volue group.
- The company has been relatively unaffected by the Covid-19 pandemic.
Volue is an international provider of business-critical software and technology services for power generation, power transmission and distribution, and infrastructure. The company offers decision support for the market’s transition to robust, secure and sustainable services that are critical to society – from analysis, forecasting, management and planning of projects and operations to trading.
Volue offers more than 2,000 customers in 44 countries flexibility, efficiency and domain expertise.
Volue has more than 600 employees across offices in various countries. The company’s head office is in Oslo.
Tekna continues to perform well. Its order book for metal powders for 3D printing of medical products, batteries, aerospace and the automotive industry is at a record high.
The company sees significant growth potential in the renewables sector and wants to accelerate growth further in 2021.
Sales of Tekna powders were up 20% in the quarter when compared year on year. For the year as a whole, the increase was the same (20%) despite significant Covid-19 effects in the industries to which Tekna sells. Results were positive in all geographic areas.
A portion of sales were made via Tekna’s joint venture with metals giant Aperam, which achieved a series of sales of commercial products during the quarter. Tekna goes into 2021 with its order book at a record high, having already secured the sale of more than half of next year’s production capacity.
A GROWTH MARKET
The market for 3D printing is in a phase of strong growth.
More and more industries are starting to use 3D printing – including the automotive industry, driven particularly by new electric car models. Management consultancy McKinsey & Company and investment company ARK estimate that 3D printing will grow by 60% per year in the coming years. Both estimate that today’s market of USD 12 billion will have grown to a market of USD 120 billion in 2025.
As a global leader in the industrial use of plasma technology, used to pulverise various materials, Tekna is positioned to take a share of this market and to contribute to more efficient use of materials as we head towards a more circular economy. Tekna foresees considerable growth in both the total market and its own sales for a long time to come.
FROM RESEARCH TO SALES
Arendals Fossekompani acquired Tekna in 2013. At the time, the company was supplying plasma machinery to universities and research institutions alongside participation in long-term research collaborations with large industrial customers. Today the company has a strong commercial focus and produces ever-increasing volumes of powders for sale to a range of industrial customers – not least in the industries mentioned above.
Based on 30 years of continuous development of systems and associated processes, Tekna is now in the process of establishing industrial ventures that apply the company’s unique knowledge and related intellectual property rights.
The 3D printing process involves building objects layer by layer using various materials in powder form, in contrast to traditional production where objects are produced by removing parts of a larger piece of material. The advantages of 3D printing are a faster production time, lower costs and less waste, as well as the opportunity to design completely new structures.
TEKNA ADVANCED MATERIALS
In 2014 the subsidiary Tekna Advanced Materials (TAM) was established for the industrial production of titanium and other powders for 3D printing. Since then it has focused on optimising production and the end product.
Today TAM is a qualified supplier to a wide range of leading producers in the medical, aerospace, defence and automotive sectors. Both its customer base and the share of repeat deliveries are rising sharply, and Tekna is making ongoing plans to expand capacity in order to meet the growing demand.
In parallel with scaling up powder production for 3D printing, Tekna has produced new products within segments such as printed electronics, batteries and hypersonic applications.
Tekna’s industrial systems are able to produce many different nanomaterials. In recent years Tekna has developed nanoproducts in nickel and copper, among others. With an average size of less than 100 nm Tekna’s products are in great demand for electronics, where components are getting ever smaller and where materials consumption and energy requirements are being reduced accordingly.
BATTERIES
In the batteries segment Tekna has developed a very pure silicon nanopowder with advantageous properties for admixtures in, and eventually replacement of, graphite anodes that are found in standard lithium-ion batteries. Full replacement of graphite with silicon could multiply the energy capacity of batteries many times over – thereby revolutionising electric vehicle batteries, for example, to provide extreme range. Tekna’s fully developed product has attracted considerable interest in the market and the company is in ongoing dialogue with a number of leading global players in battery production and/or suppliers of materials for such production. The aim is to establish supplier contracts and/or partnership undertakings as quickly as possible as a basis for scaling production.
In the coming periods Tekna will increase the rate of development of new industry verticals where its plasma technology has unique, and in some cases disruptive, properties.
Tekna: Record-high order book and new battery product
TEKNA
NSSLGLOBAL
- Total operating revenues in the fourth quarter amounted to MNOK 62 (MNOK 36) and as at 31 December to MNOK 183 (MNOK 142).
Consolidated earnings before tax for the quarter totalled MNOK 3 (MNOK –16) and as at 31 December MNOK –31 (MNOK –49).
- Tekna enjoyed good revenue growth in the quarter, with solid sales performance for both powders and system solutions. Tekna goes into 2021 with its order book at a record level for deliveries of both systems and powders.
- Sales of powders are up 20% year on year. The company is seeing positive development in all geographies.
- Production facilities operated well in the period and preparations are now being made to commission a further machine for titanium production.
- Production and sales in the company’s French joint venture ImphyTek (owned 50/50 with Aperam) are developing according to plan, and the company has had a number of commercial sales of powders during Q4.
Tekna is a globally leading supplier of materials for 3D printing in the aerospace, medical and automotive sectors and is well positioned in the future market for advanced nanomaterials within the global electronics and batteries industries.
Through active collaboration with a series of global players, Tekna is putting the technology to use in more and more new areas and establishing further industrial ventures where this is attractive.
The company is headquartered in Canada, with subsidiaries in France and China.
- Total operating revenues in the fourth quarter amounted to MNOK 218 (MNOK 242) and as at 31 December to MNOK 879 (MNOK 894).
Consolidated earnings before tax came in at MNOK 31 (MNOK 39) for the quarter and as at 31 December MNOK 148 (MNOK 162).
- The company had normal, good activity levels during the quarter.
Decreased revenues and earnings when compared year on year are largely due to a contract extension in 2019 with particularly good margins.
- In December NSSLGlobal became an authorised launch partner for Iridium’s new Global Distress and Safety System for maritime use.
- In October the company took on a 10-person engineering team from the bankrupt Pro Nautas’s German and Dutch operations. These individuals will play a key part in developing new products and services for the maritime segment.
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.
The company’s headquarters are located just outside London.
COGEN ENERGIA
EFD INDUCTION
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.
The company’s head office is in Skien, Norway.
- Total operating revenues in the fourth quarter amounted to MNOK 345 (MNOK 318) and as at 31 December to MNOK 1,150 (MNOK 1,170).
Consolidated earnings before tax for the quarter totalled MNOK 45 (MNOK –2) and as at 31 December MNOK 30 (MNOK –23).
- EFD Induction delivered good growth in revenues and earnings during the quarter. In addition, the company’s order intake was at a record high, driven primarily by deliveries for wind turbine production.
- Order intake within the automotive industry remains weak in Europe.
There is great uncertainty in the market and the weak market situation is expected to continue throughout the current year.
- During the year the company carried out extensive restructuring processes. Restructuring costs of MNOK 44 were charged to earnings during the year.
- 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 during the quarter.
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.
Cogen’s headquarters are in Madrid.
- Total operating revenues in the fourth quarter amounted to MNOK 159 (MNOK 326) and as at 31 December to MNOK 519 (MNOK 1,272).
Consolidated earnings before tax came in at MNOK 16 (MNOK 12) for the quarter and as at 31 December MNOK 23 (MNOK 9).
- Weak energy prices significantly reduced revenues when compared year on year. In addition, at the start of the year the company terminated a contract with a large unprofitable customer. The contract represented annual turnover of around MNOK 600.
- The gas price, which is the company’s most significant cost factor, was low throughout the quarter, which made a positive contribution to performance in the period. The company’s plants operated well during the quarter.
- In December the company extended a large contract with an industrial customer for a further four years.The contract expires at the end of 2025
AFK ADMINISTRATION
*The income statement and balance sheet for the AFK parent company as presented in AFK’s annual reports cover AFK Administration and AFK Hydropower.
The AFK parent company 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.
In legal terms AFK Hydropower is part of the AFK parent company, but since it is regarded as an independent area of activity it is shown separately in AFK’s financial statements.
AFK Administration employs 14 people. The head office is located in Arendal.
HIGHLIGHTS OF Q4 2020
Operating profit reflects ongoing operating costs within AFK Administration. Fluctuations in earnings before tax are primarily due to exchange rate fluctuations and transaction effects.
As at 31 December the company’s financial investment portfolio had a total value of MNOK 735. The portfolio consists primarily of shareholdings in the companies Victoria Eiendom and Eiendomsspar. The year-to-date return amounts to –18%, corresponding to MNOK –162, due to share prices falling as a result of the Covid-19 pandemic. The unrealised portion of the return on the financial investments is reported in other comprehensive income.
AFK’s financial position is sound and the company is net cash positive at year-end. In connection with the listing of Volue on Euronext Growth on 19 October, AFK realised MNOK 520 from a sell-down of shares. This is reported as an accounting gain of MNOK 440 in the quarter. As a result, AFK’s cash reserves strengthened in the quarter and as at 31 December amounted to MNOK 766. In the same period the company’s equity strengthened by MNOK 464 and amounted to MNOK 3,383 at year-end.
The company has undrawn credit facilities of MNOK 1,780 at year-end. AFK has started preparing for the potential issue of a green bond. The bond will be used to refinance AFK’s outstanding bond that matures in July 2021 and to finance new green, sustainable investments. The bond has been assessed by CICERO and will be classified dark green in its “Shades of Green” system.
AFK HYDROPOWER
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).
HIGHLIGHTS OF Q4 2020
Production in the quarter was around normal levels.
Although prices in the period were low, operational pressure remained high due to the high reservoir levels in the upper parts of the Arendal watercourse. Electricity prices rose towards the end of the quarter due to somewhat colder weather and the associated increase in power consumption, as well as increased access to transfer capacity abroad. Incidentally, Nelaug experienced its wettest 24 hours in 2020 on 28 December, resulting in a 24- hour precipitation record for Agder. The plants operated with no significant interruptions or disruption.
Power generation in the fourth quarter amounted to 139 GWh (172 GWh). The average spot price in the NO2 price area was NOK 0.137/kWh (NOK 0.392/kWh). Precipitation and inflow in 2020 were around 127% and 141% of the norm for the watercourse respectively.
The figure below shows the power price (NO2) and power generation for Arendals Fossekompani per week for the period 31/09/2019 – 31/12/2020:
During the quarter audits and other projects requiring external access to the power plants were deferred due to Covid-19, as an infection control measure. Essential audits and access took place in accordance with established infection control procedures.
AFK PROPERTY
AFK has various property investments 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.
HIGHLIGHTS OF Q4 2020
Apartment sales for Bryggebyen’s first phase of construction were at a stable good level throughout the year and were particularly good towards the year- end. To satisfy the market a decision was made in August to expand the phase by a further 31 apartments. Of the total 113 apartments, 67 had been sold at the beginning of January 2021.
Construction is proceeding according to plan, with all the apartments in the expanded phase expected to be ready for occupation 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.
SHARES AND SHAREHOLDERS
Following the share split on 20 November, with each share in the company being split into 25 shares, there are now a total of 55,995,250 shares in the company.
As at 31 December a total of 1,111,200 were treasury shares. In the fourth quarter 824,993 shares were traded, representing 1.5% of the total number of shares.
The share price on 30 September was NOK 159 and on 31 December NOK 184.
RISKS 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 2019.
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.
Transactions carried out between related parties are detailed in Note 4. None of these transactions is 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, with revenues and earnings for AFK as a whole in 2021 expected to be equal to or better than results for 2020. However, there remains considerable uncertainty associated with the Covid-19 pandemic and the future development of energy prices.
HYDROPOWER
In view of the market’s estimated energy price trend for 2021, revenues and operating profit for the Hydropower are expected to be considerably better 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 better than in 2020.
TEKNA
Tekna’s revenues and operating profit in 2021 are expected to be better than in 2020.
NSSLGLOBAL
For 2021 NSSLGlobal expects 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
For Cogen Energia revenues and operating profit in 2021 are expected to be on a par with 2020.
EFD INDUCTION
Adjusted for extraordinary income from the sale of property in 2020, revenues and operating profit for EFD Induction in 2021 are expected to be at the same level as 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, 12 February 2021
The Board of Directors, Arendals Fossekompani ASA
Consolidated Income Statement, Continuing Operations
2020 2020 2019 2020 2019
Amounts in MNOK Q4 Q3 Q4
Year-to-
date Full year Note
Operating revenues and operating costs
Sales revenues 7 995 861 1 173 3 594 4 450
Other operating revenues 19 15 24 64 46
Operating revenues 1 014 876 1 198 3 658 4 496 Cost of goods sold 384 356 558 1 414 2 203 Salaries and payroll costs 392 302 372 1 357 1 320 Other operating costs 2 99 92 126 442 468
Operating costs 874 750 1 056 3 212 3 990 EBITDA 140 126 141 446 505
Depreciation of property, plant and equipment 2 47 43 55 190 198
Amortisation of intangible assets 14 15 16 61 64
Impairment of non-current assets 3 7 -0 2 8 11
Operating profit 71 68 68 187 233
Financial income and financial expenses Financial income 1 6 25 55 87
Financial expenses 3 5 21 23 109 76
Net financial items -4 -15 2 -68 11
Share of profit/loss from associates -14 - - -14 -2
Profit/loss before tax expense 53 53 70 119 243
Tax expense 5 18 73 28 151
Profit/loss, continuing operations 48 35 -3 91 92
Profit/loss from discontinued operations (after tax) 6 - 33 -20 39 -45
Ordinary profit/loss 48 68 -23 130 47
Attributable to Non-controlling interests’ share of profits 18 12 -13 58 2
Equity holders of the parent 30 55 -10 72 45
Basic/diluted earnings per share (NOK) 0,87 1,23 -0,42 2,36 0,84 Other comprehensive income Translation adjustments -68 8 -3 2 12
Change in hedging reserve 4 9 25 -15 27
Tax on items that may be reclassified to profit or loss -3 -2 -6 -2 -6
Items that may be reclassified to profit or loss -67 15 15 -14 33
Change in fair value, financial assets 77 -71 135 -162 195
Actuarial gains and losses 4 - -6 4 -6
Tax on items that will not be reclassified to profit or loss -1 - 2 -1 2
Items that will not be reclassified to profit or loss 80 -71 130 -159 191
Other comprehensive income for the period 13 -55 145 -174 223
Ordinary profit/loss 48 68 -23 130 47
Comprehensive income for the period 61 12 122 -44 270
Attributable to Non-controlling interests 13 14 -4 58 2
Equity holders of the parent 48 -2 126 -102 268
Comprehensive income per share (NOK) 1,11 0,22 2,23 -0,80 4,83
Consolidated balance sheet
2020 2019
Amounts in MNOK
Q4 Full year
Note Assets
Property, plant and equipment 1 164 1 234
Intangible assets and goodwill 984 771
Investments in associates 0 -
Pension funds 26 25
Other receivables and investments 261 236
Deferred tax assets 144 125
Total non-current assets
2 579 2 390 Inventories 682 468Contract assets 158 123
Trade and other receivables 1 071 945
Cash and cash equivalents 1 765 1 172 Financial assets at fair value through OCI 735 896
Financial assets held for trading 10 10
Discontinued operations 6 - 142
Total current assets
4 421 3 755Total assets
7 000 6 145Equity and liabilities
Share capital 224 224Other paid-in capital 8 6
Treasury shares -64 -67
Other reserves 692 868
Retained earnings 2 737 2 146
Total equity attributable to equity holders of the parent
3 597 3 177 Non-controlling interests 316 142Total equity
8 3 913 3 318 Bond loans - 300Interest rate and currency swaps related to bond loans - 93
Interest-bearing loans and borrowings 501 320
Employee benefits 36 40
Provisions 86 77
Deferred tax liabilities 84 59
Right-of-use liabilities, non-current (IFRS 16) 166 202
Total non-current liabilities
872 1 091 Bond loans 300 -Interest rate and currency swaps related to bond loans 107 -
Interest-bearing loans and borrowings (current portion) 87 86
Bank overdraft facility 314 196
Trade and other payables 737 611
Tax payable 43 111
Contract liabilities 123 116
Right-of-use liabilities, current (IFRS 16) 55 64
Other current liabilities 450 439
Liabilities from discontinued operations 6 - 112
Total current liabilities
2 215 1 736Total equity and liabilities
7 000 6 145Consolidated cash flow statement
2020 2019
Amounts in MNOK
YTD YTD
Cash flow from operating activities
Ordinary profit/loss, continuing operations
91 92Adjusted for
Depreciation, amortisation and impairment of property, plant and equipment and intangible assets 259 280Net financial items 54 -11
Share of profit from associates 14 2
Gain on sale of property, plant and equipment 17 1
Tax expense 28 151
Total after adjustment of ordinary profit
463 514Change in inventories -202 -103
Change in trade and other receivables -222 144
Change in trade and other payables 116 -26
Change in other current assets 51 10
Change in other current liabilities -7 48
Change in other provisions 9 7
Change in employee benefits -2 -20
Total after adjustment of net assets
206 575Taxes paid -125 -100
Net cash flow from operating activities A
81 474Cash flow from investing activities
Interest received etc. 17 29Dividend received 10 29
Proceeds from sale of property, plant and equipment and intangible assets 12 4
Purchase of property, plant and equipment and intangible assets -207 -167
Purchase of subsidiaries (net of cash acquired) -109 -8
Purchase of assets measured at FVOCI -1 -
Proceeds from sale of assets measured at FVOCI - 321
Payments for other investments -25 -47
Proceeds from sale of other investments 2 1
Purchase of non-controlling interests -242 -8
Sale of shares in subsidiaries 521 0
Net cash flow from investing activities B
-23 153Cash flow from financing activities
Equity payment from non-controlling interests 530 1Proceeds from new long-term borrowings 197 30
Repayment of long-term borrowings -67 -181
Net change in bank overdraft 133 31
Interest paid etc. -75 -74
Dividend paid -223 -140
Purchase/sale of treasury shares 5 9
Net cash flow from financing activities C
500 -325Net change in cash and cash equivalents A+B+C
558 302Cash and cash equiv. (opening balance) 1 172 867
Currency translation adjustments for cash and cash equivalents 35 3
Cash and cash equiv. (closing balance)
1 765 1 172Notes to interim report for Q4 2020
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 2019.
Note 2
Key accounting policies
The accounting policies for 2019 are described in the Annual Report for 2019. 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 2019. The same policies have been applied in the preparation of the interim financial statements as at 31 December 2020.
New standards effective from 1 January 2020 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 resulted in impairment losses on property, plant and equipment and goodwill in the subsidiary EFD of MNOK 8.
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 approx. MNOK 31.
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 4
Related party transactions
Disclosures concerning related party transactions are given in the company’s Annual Report for 2019, Note 24. In December 2020 AFK Property AS bought Bølevegen 4 AS from EFD Induction AS. The sale took place at fair value in accordance with the valuation obtained. EFD’s gain on the sale has been eliminated in consolidated profit.
Note 5
Parent company gain from sell-down in Volue AS
AFK sold down its share in connection with the listing of Volue AS on Euronext Growth, resulting in
a gain in the AFK parent company of MNOK 441. The gain is eliminated in consolidated profit but is shown as paid-in capital in Note 8 Equity.
Note 5 Sale of subsidiary
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 and 2019 are presented below.
2020 2019
Amounts in MNOK 01/01–11/08
Full year
Profit/loss
Operating revenues 181 311
Operating costs 168 360
Depreciation of property, plant and equipment 4 8
Operating profit
10 -57Net financial items -0 -1
Profit/loss before tax expense
9 -58Tax expense 2 -13
Profit/loss Scanmatic Elektro
7 -45Gain on sale of Scanmatic Elektro 32
Profit/loss from discontinued operations (after tax)
39 -45Basic/diluted earnings per share (NOK)*
0,71 -0,82Balance sheet
Non-current assets 0,0 19
Current assets 123
Total assets, discontinued operations
142Non-current liabilities 16
Current liabilities 96
Liabilities from discontinued operations
112Note 7
Segment reporting as at 31 December
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
Sales revenues, on delivery 60 206 - - 147 207 871 876 545 670
Sales revenues, on account - - - - 743 589 - - 559 492
Other operating revenues 3 1 7 1 2 2 8 18 46 8
Operating revenues 63 208 7 1 893 798 879 894 1 150 1 170 Operating costs 56 60 59 16 744 698 670 664 1 041 1 116 Depreciation, amortisation and impairment 9 9 1 - 66 60 51 69 67 68
Operating profit -2 139 -53 -15 83 40 159 162 41 -14
Net financial items - - 557 22 -9 -6 -11 0 -12 -9
Tax expense -3 82 -15 -11 6 9 33 43 10 26
Profit/loss, continuing operations 1 57 519 17 67 25 115 119 19 -48
Total assets 237 299 3 864 3 592 1 493 1 025 767 781 1 038 983
Total debt and liabilities 31 89 686 597 686 715 365 364 665 630
Net interest-bearing debt - - -402 -335 -430 -191 -279 -267 53 83
Segment reporting as at 31 December 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Sales revenues, on delivery 89 72 519 1 272 7 5 2 - 2 241 3 308 Sales revenues, on account 52 61 - - - - 1 354 1 142 Other operating revenues 33 9 - - 6 9 -41 -3 64 46
Operating revenues 183 142 519 1 272 13 14 -49 -3 3 658 4 496 Operating costs 174 166 472 1 257 15 14 -22 - 3 212 3 991 Depreciation, amortisation and impairment 17 17 19 19 9 9 21 22 259 272
Operating profit -8 -41 27 -4 -12 -9 -49 18 187 233
Net financial items -24 -8 -4 13 -3 -2 -562 1 -68 11
Tax expense -4 -9 6 11 -0 -0 -6 0 28 151
Profit/loss, continuing operations -28 -41 17 -2 -14 -11 -608 -24 91 93
Total assets 336 284 619 610 554 266 -1 909 -1 695 7 000 6 145 Total debt and liabilities 226 282 439 430 378 150 -389 -430 3 087 2 827 Net interest-bearing debt 149 237 120 124 324 123 0 - -466 -187
*Volue comprises the companies Powel, Markedskraft, Wattsight and Scanmatic with the exception of the subsidiary Scanmatic Elektro. These companies are now reported collectively as one unit and were combined into one legal entity in September 2020.
**“Property” comprises Vindholmen Eiendom, Bedriftsveien 17, Steinodden Eiendom, Arendal Lufthavn Gullknapp, Songe Træsliperi and AFK Property.
Hydropower Administration Volue* NSSLGlobal EFD Induction
Tekna Cogen Property** Eliminations Total
Amounts in MNOK
Share capital Other paid-in
capital Treasury shares Other reserves Retained earnings
Total equity attributable to equity holders of the parent
Non-controlling
interests
Total equity
Note 8 Equity
Balance as at 1 January 2019
224 1 -71 937 1 914 3 005 167 3 172Ordinary profit/loss - - - - 73 73 8 81
Other comprehensive income for the period - - - 509 -289 219 -0 219
Sale/purchase of treasury shares - 4 4 2 -1 10 0 10
Gain on financial instruments measured at FVOCI - - - -580 580 - - -
Other changes in subsid. - - - - 26 26 -10 16
Dividend to shareholders - - - - -157 -157 -23 -180
Balance as at 31 December
224 6 -67 868 2 146 3 177 142 3 318Balance as at 1 January 2020
224 6 -67 868 2 146 3 177 142 3 318 Ordinary profit/loss - - - - 72 72 58 130Other comprehensive income for the period 0 -0 - -176 3 -174 0 -174
Gain on sell-down in Volue - - - - 441 441 - 441
Sale/purchase of treasury shares - 2 3 - -1 4 -0 4
Other changes in subsid. - - - 0 266 266 149 416
Dividend to shareholders - - - - -190 -190 -33 -223
Balance as at 31 December
224 8 -64 692 2 737 3 597 316 3 913ARENDALS FOSSEKOMPANI ASA POSTBOKS 280, 4803 ARENDAL, NORWAY
ARENDALSFOSS.NO
