Arendals Fossekompani Annual Report 2020 Ripples
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Arendals Fossekompani Annual Report 2020 Ripples Arendals Fossekompani Developing green-tech companies Ripples It all started with waterfalls. Arendals Fossekompani (AFK) was esta- blished in 1896 to harness the energy in running water. Our skills and competence in this area laid the foundation for things to come. Hydro- power is still a part of our DNA and our portfolio, but nowadays we’re more recognized as an industrial investor - the owner of international energy and technology companies. We have in fact worked with clean energy and green technology for more than a hundred years. One ripple effect from our economic success is the building of a modern portfolio of green-tech companies. Arendals Fossekompani is deeply invested in the green transition. We believe the green economy is the road to the future, and we will contri- bute to the journey. Our hope and goal for the green-tech companies we develop today, is that they will create positive ripple effects in the future. Highlights 2020 — Listing. Listing of Volue Volue was successfully listed on Euronext Growth Dividend. on 19 October, only seven months after the company was established as a result of a merger of Powel, Investments. Wattsight, Markedskraft and Scanmatic. +74% — 10.1B — HIGHStrong increase Share split- 1:25 in market cap In November, an extraordinary General Meeting deci- ded to split the AFK share. 1 old share was split into 1:25 AFK market cap increased from NOK 5.8 billion as 5.8B 25 new shares. The decision was made to ensure of 1 January to NOK 10.1 billion as of 31 December. that the market value of the AFK share is more in line This reflects an increase in the share price from NOK with other shares on the Oslo Stock Exchange, and 106 to NOK 186 during the year. to increase the liquidity in the share. — Urban — New ESG Director Building Ingunn Ettestøl was appointed the first ESG Director Bryggebyen of Arendals Fossekompani. Having been with AFK since 2017, Ettestøl holds a doctoral degree in electri- Building of Bryggebyen, an urban development cal power from the Norwegian University of Science project in Arendal, is well underway. The first 113 and Technology. She is a former Director of Strategy apartments will be completed by the fall of 2021. and Analysis at Enova and Division Director for Wind Bryggebyen comprises plans for 500-700 apart- LIGHTSPower at Agder Energi. ments to be built in the next 10-15 years. — — Establishing Alytic Acquiring Kontali In November, Alytic was established to invest in Kontali Analyse, a world-leading provider of data and data-driven companies with need for transformation analyses of global aquaculture and fisheries, was acqu- and scale. Alytic is headed by Espen Zachariassen, ired by Alytic. A plan for rapidly growing Kontali in new former CEO of Wattsight, a regional company which markets and geographies has been implemented. evolved into a European frontrunner for power market analyses. -75% — — HIGHElectricity prices at Quarterly- dividend record-low levels Payment of quarterly dividend commenced in the second quarter. AFK had always paid annual divi- The average price of electricity (NO2 area) in 2020 dends, but changed its policy to a more investor was 75% lower than in 2019. 2020 marked a year in 0.098 friendly quarterly dividend. which electricity prices were at a historically low level. NOK/kWh $ Thank you! — — Investment in Handling Covid-19 Beyonder Throughout the year we have all learnt about social distancing, how to wear masks and work from home. An investment in battery technology company We are impressed by how our portfolio companies Beyonder, located in Stavanger, Norway, was comple- have handled the situation and how their employees ted in December. Beyonder has developed the around the world have kept business running during next generation sustainable high-power batteries, extraordinary times. Your efforts are truly apprecia- which are safer and more cost-effective than other ted. Thank you! P LIGHTSbatteries. a t ric k W e be r, N SSL Global Germany Annual Report Content This is AFK Portfolio companies THIS IS AFK 12 VOLUE 48 THE HISTORY OF AFK 14 TEKNA 50 AFK IN THE WORLD 16 EFD INDUCTION 54 01 ESG IN AFK 18 03 NSSLGLOBAL 56 COGEN ENERGIA 58 ALYTIC 60 AFK PROPERTY 62 OTHER INVESTMENTS 64 The Group Intermezzo SHAREHOLDER INFORMATION 24 REPORTING – 100 YEARS AGO 66 AFK GROUP 28 AFK PARENT 32 02 EXPLAINING THE 2020 ELECTRICITY MARKET 36 Financial statements MANAGEMENT & BOARD OF DIRECTORS 38 CEO LETTER 40 AFK GROUP ANNUAL ACCOUNTS & NOTES 70 BOARD OF DIRECTORS’ REPORT FOR 2020 42 DECLERATION BY THE MEMBERS OF THE BOARD & CEO 152 INDEPENDENT AUDITOR’S REPORT 154 04 CORPORATE GOVERNANCE 160 FINANCIAL PERFORMANCE MEASURES 168 ALTERNATIVE PERFORMANCE MEASURES 170 Part 01 This is AFK THIS IS AFK 12 THE HISTORY OF AFK 14 AFK IN THE WORLD 16 ESG IN AFK 18 01 ARENDALS FOSSEKOMPANI PART 01 – THIS IS AFK ANNUAL REPORT 2020 This is AFK Collaborative. About us Arendals Fossekompani is a green-tech investment company, the owner of energy and technology companies which enable the transi- Responsible. tion to a green economy. Our portfolio companies have more than 2,100 employees in 26 Dynamic. countries. Established in 1896 to harness the energy from an everlasting natural resource; water, Arendals Fossekompani is still a proud producer of hydropower, but also an investor in other renewables and associated value chains, including solar power and batteries. Arendals Fossekompani has been listed on the Oslo Stock Exchange since 1913 and is headquartered in Arendal. Our vision Arendals Fossekompani shall create lasting value for its stakeholders through long-term and active development of the companies we own. We invest in and own companies that make energy from renewable sources more usable and accessible, and that contribute to a more sustainable use of resources. Based on our industrial and financial expertise, we also invest in technology and energy companies that enable the green transition. Arendals Fossekompani’s contributions and mission are summarized in this sentence: Developing green-tech companies. Our values Collaborative We develop our companies in collaboration with the world around us and our partners. Long-term perspective Based on 125 years of industrial history, we continue to develop our companies in a sustainable and long-term perspective. Dynamic We show the ability, energy and motivation to carry out our ambitions. Responsible We act in an ethical and responsible manner in all situations. We develop our companies in a sustainable manner. 12 13 ARENDALS FOSSEKOMPANI PART 01 – THIS IS AFK ANNUAL REPORT 2020 Arendals Fossekompani Creating ripples for more than a century 1896 1913 COMPANY FOUNDED ELECTRICITY AND INDUSTRY Arendals Fossekompani was founded on 30 January The construction of Bøylefoss Power Plant started in 1896 to harness the forces in the Arendal watercourse 1911, in parallel with the establishment of new industry system and transform them into electric power. The in Eydehavn. The first electric power from Bøylefoss company acquired several waterfalls, including Bøyle- was delivered to Eydehavn in the summer of 1913. That fossen and Flatenfossen. Norwegian industrial entre- same year, Arendals Fossekompani was listed on the preneur Sam Eyde was instrumental in the early years. Oslo Stock Exchange. 1927 1960s MORE HYDROPOWER FINANCIAL INVESTOR Growing demand for electricity for industrial purpo- Arendals Fossekompani gradually built a substantial ses, led to the development of Flatenfoss Power Plant financial capacity. At the end of the 1960s, the company in 1927. The original plant was operational until it was changed its mission statement and built a portfolio of replaced in 2009. financial investments in listed and unlisted companies. 1990s 2000s NEW ELECTRIC OPPORTUNITIES AN INTERNATIONAL GREEN-TECH Deregulation of the Norwegian electricity market INVESTMENT COMPANY presented new market opportunities. Arendals Fosse- The new millennium marked the start of the transforma- kompani played an active role and established a subsi- tion of Arendals Fossekompani, from a local hydropo- diary, Markedskraft, as an independent provider of wer producer to an international investment company. services in the Nordic and European wholesale electri- Starting in 2004, a series of successful acquisitions of city market. Norwegian and international companies made Arendals Fossekompani the company it is today. Revenues incre- ased from around NOK 250 million in 2004 to NOK 3.7 billion in 2020. Today, hydropower accounts for approxi- mately four percent of revenues. 14 15 ARENDALS FOSSEKOMPANI PART 01 – THIS IS AFK ANNUAL REPORT 2020 AFK in the world Number of employees by country Global. NORWAY 585 POLAND 96 ISRAEL 9 JAPAN 4 GERMANY 221 FRANCE 86 MALAYSIA 8 RUSSIA 3 Local. INDIA 193 USA 82 THAILAND 7 SOUTH KOREA 2 CHINA 183 ROMANIA 66 BRAZIL 7 TURKEY 1 CANADA 148 DENMARK 64 SINGAPORE 5 AUSTRIA 1 Vital. UNITED KINGDOM 144 SWEDEN 61 FINLAND 4 SPAIN 100 SWITZERLAND 20 ITALY 4 AFK Parent Volue Tekna NSSLGlobal EFD Induction Cogen Alytic Company Energia EMPLOYEES EMPLOYEES EMPLOYEES EMPLOYEES EMPLOYEES 624 176 205 971 27 AFK EMPLOYEES HEAD OFFICE HEAD OFFICE HEAD OFFICE HEAD OFFICE 98 HEAD OFFICE Hydropower Oslo, Norway Sherbrooke, Canada Surrey, UK Skien, Norway Arendal, Norway HEAD OFFICE COUNTRIES COUNTRIES COUNTRIES COUNTRIES Madrid, Spain COUNTRIES AFK Property Norway, Sweden, Canada, France, China, United Kingdom, Germany, India, China, Norway, Norway, Netherlands COUNTRIES Denmark, Finland, South Korea Denmark, Norway, Poland, Germany, USA, Romania, Spain EMPLOYEES Germany, Poland, Israel, Singapore, USA France, United Kingdom, 27 Switzerland, Turkey. Poland, Sweden, Malaysia, Brazil, Thailand, Japan, Italy, HEAD OFFICE Spain, Austria Arendal/Froland, Norway 16 17 ARENDALS FOSSEKOMPANI PART 01 – THIS IS AFK ANNUAL REPORT 2020 In January 1896, Arendals Fossekompani ESG in AFK was established to harness the energy from Sustainability is not an everlasting natural a megatrend.