Letter from the CEO

OPTIMISING THE PORTFOLIO – LESS RISK, MORE FOCUS, NEW PARTNERS 

In 2024, we positioned Volue for realising its full potential by delisting the company off the Oslo Stock Exchange together with our new partners, Advent International and Generation Investment Management. The partnership secures access to capital, resources and networks necessary to take Volue to the next level. Together with our new partners, our clear goal is to further accelerate Volue’s growth and value creation to the benefit of Arendals Fossekompani’s shareholders. As part of the transaction, we reduced our ownership in Volue from 60% to 40% at premium pricing, thereby realising a financial gain of NOK 3.3 billion and net cash proceeds of NOK 1 billion while maintaining significant exposure to Volue’s growth journey. 

Managing risk has also been an important theme in 2024. We have de-risked the portfolio by decreasing our exposure to capital intensive and subsidy dependent business models. As part of this strategy, we divested renewable development company,Vergia.We also decided to discontinue our engagement in the battery space due to the increasing cost disadvantage of European production and generally challenging market conditions. This resulted in an impairment of Arendals Fossekompani's shareholding and shareholder debt in Commeo.

IMPROVING OPERATIONAL PERFORMANCE IN OUR BUSINESSES 

Driving growth and continuous operational improvement in our businesses is an important source of value creation for Arendals Fossekompani. Our main portfolio companies delivered strong operating results in 2024 with record performance from both ENRX and NSSLGlobal, while normalising power prices resulted in lower hydropower profits than last year. Overall, consolidated revenues for the group grew by 12%, operating margin ended at 9% and our balance sheet was strengthened from a net debt position of NOK 495 million at the start of the year, to net cash of NOK 45 million at the end of the year. 

Volue saw continued revenue growth and underlying margin expansion in 2024. In addition to the de-listing, the company also completed the acquisition of algo-trading company PowerBot GmbH and executed a significant restructuring programme laying the foundation for further margin expansion in the year to come. 

ENRX continued to strengthen its Heat business during the year with both healthy revenue growth as well as margin expansion, resulting in the best year in the company’s history. New factories were established in Poland and China. The company also progressed its entry into the emerging high power wireless charging market, where it is taking a leading position in defining industry standards. 

During the year, NSSLGlobal grew its profits and continued to expand its efforts in maritime and governmental projects, providing secure connectivity through GEO and LEO satellite networks together with customised hardware and software solutions for critical operations as well as for crew welfare. Like ENRX, NSSLGlobal also reported the highest revenue and operating profit in the company’s history.

Tekna improved its operating result through a series of profitability improvement initiatives during the year. After completing a comprehensive programme to increase powder production capacity, the company also set new production records during the year. Carefully managing costs and cash while expanding addressable market will remain the key focus for Tekna in the year to come.

LOCAL VALUE CREATION 

We are expanding our local hydropower generation capacity. Construction of the new hydropower plant, Kilandsfoss, is progressing according to schedule. When finished, it will produce 38 GWh per year, equivalent to the energy consumption of approximately 2,000 households. Kilandsfoss hydropower plant is scheduled to start production of electricity in 2026. 

During the year, AFK Eiendom won an attractive contract to build a new production facility for the electronics manufacturing company Kitron, in doing so opening a new industrial area in Arendal. We have also contributed to social and community initiatives in the region. Since 1896, we have supported communities and created value locally. This is a source of pride in our company as we look forward to creating new partnerships and continuing our influence in the years to come. 

2024 has been a year with both difficult challenges and important achievements. As we stand at the start of a new year, we do so with a more focused and balanced portfolio, new partners, improved operations and a strong balance sheet. All is set for creating value for our owners, employees, customers and society at large. None of which is possible without our people. Thank you all for your commitment, hard work, innovation and grit. You are our greatest strength and our greatest asset. I sincerely look forward to continuing to create value together, for generations to come.