First quarter financial results

“Total revenue increased by 2% compared to the same quarter the previous year. Strong growth in key portfolio companies Volue and ENRX was largely offset by lower electricity prices impacting revenue generation in AFK’s hydropower business, and by low sales in Ampwell,” says Benjamin Golding, Chief Executive Officer at Arendals Fossekompani. 
 

The reduced operating profit compared to the first quarter in 2023 was mainly driven by lower electricity prices generating lower revenues and profit from hydropower production, in addition to a higher operating loss in Ampwell. 
 

Operating in international markets, the Arendals Fossekompani Group is exposed to currency fluctuations. Revenue in ENRX, NSSLGlobal and Tekna was positively affected by a weakened NOK compared to the first quarter of 2023. 
 
Electricity prices in the quarter were substantially lower from the same period last year, with the NO2 price area averaging EUR 64.5/MWh (EUR 108/MWh) in the quarter. Power generation was comparable to the same period last year of 161 GWh (167 GWh). Lower prices reduced quarterly revenues and operating profit to NOK 122 million (190 million) and NOK 95 million (161 million), respectively. 
 

Following high activity levels in all portfolio companies, AFK Group revenues are expected to be higher in 2024 than in 2023. Operating profit is expected to be lower than in 2023, driven by expected lower electricity prices, as well as reduced margins in NSSLGlobal and increased operational losses for Alytic and Ampwell. 
 
“Q1 has featured significant orders, important deliveries and a steady performance across several portfolio companies,” says Golding. 

 
 
SEGMENT DEVELOPMENTS  
 
Volue continues to grow in the first quarter. Total operating revenue in the first quarter amounted to NOK 400 million (340 million), corresponding to a growth rate of 18% when comparing to the first quarter of 2023. SaaS revenues were NOK 126 million in the quarter, an increase of 42% compared to the first quarter of 2023, representing 31% of total revenue. ARR grew at a rate of 27%, constituting 71% of total revenue in the quarter. Adjusted EBITDA in the quarter was NOK 83 million (55 million), corresponding to an adjusted EBITDA margin of 21% (16%).  

NSSLGlobal reports continued strong sales and operating profit as well as solid order intake. Revenue in the first quarter was GBP 21.8 million (23.9 million) and operating profit ended at GBP 4.5 million (4.1 million), corresponding to an operating margin of 20% (18%). NSSLGlobal won GBP 91.5 million of new business opportunities and/or contract extensions/upgrades during the quarter, of which the majority was related to a 5-year Commercial Satellite Communication contract with an option for a further 2 years.  

Tekna reports revenues of CAD 8.7 million (9.4 million). The 8% decline from the same period previous year was partly driven lower investments in new 3D-printing machines, as well as lower Systems sales, which are volatile in nature. Adjusted EBITDA amounted to CAD -2.6 million (-1.2 million) driven by lower top line, as well as one-off items related to a joint venture in France. Total order backlog at the end of the quarter was CAD 22.9 million (26.4 million), driven by reduction in the Systems segment. Order backlog for Advanced Materials was up 17% since the last quarter. The pipeline for Systems projects for the remainder of the year is strong, and Tekna continues to experience strong demand for its advanced materials, despite a current slow-down in the 3D-printing machine segment. 

ENRX reports a total operating revenue in the first quarter of EUR 46.2 million (41.9 million), a 10% increase from the same quarter in 2023. Revenue growth was driven by a higher activity level within the Heat division, with solid growth in Europe and North America. EBIT for the quarter ended at EUR 4.0 million (3.4 million), corresponding to a margin of 8.6%. Total order intake for the quarter ended at EUR 35.1 million (41.1 million), and the backlog per quarter end was EUR 74.3 million (94 million).  
 

“Our companies are well positioned within high-growth global industry verticals that have a positive long-term outlook. The portfolio is diversified, with both stable cash flow generating assets and attractive growth opportunities,” says Golding.  

FINANCIAL POSITION  
 
Arendals Fossekompani’s financial position remains solid. The company’s available cash on 31 March amounted to NOK 1,064 million. In addition, the company has undrawn credit facilities of NOK 903 million, securing available liquidity of NOK 1,967 million as per end of the quarter. 

DIVIDEND  
On May 15th, Arendals Fossekompani’s Board of Directors decided to pay an ordinary cash dividend of NOK 1.00 per share for the first quarter of 2024. The dividend is set to be paid on 31 May 2024.