Aker Horizons Asa

Hello, everyone. My name is Lars Bære. I'm the CEO of Aker Horizons. Welcome to today's presentation of the fourth quarter results. I'm joined here today with CFO Kristoffer Dahlberg and CFO of Mainstream, Julie Berg. I will first comment upon some key developments since Q3, and then we will take you through the status of the investment portfolio and the Q4 financials. First out, carbon capture. We're excited to see both material industrial progress in the carbon capture business and a significant financial event with yesterday's dividend announcement. So the ACC board have proposed a cash dividend of NOC 3.5 billion. This will provide a NOC 1.5 billion liquidity inflow to Arc Horizons when approved and executed. This material dividend amount will support the ongoing process to optimize the overall capital structure of Arc Horizons. The SLB Kapturi JV reached significant industrial milestones last quarter. The JV successfully completed the commissioning and handing over of the first modular Just Catch 100 carbon capture plant at the Twents Waste to Energy facility in the Netherlands. Also, the Kapturi JV got the material contract award with the EPCIC contract for a 400,000 ton Just Catch unit to the Hafslund Celsius Waste to Energy plant here in Oslo. This contract award is a significant milestone in the JV's efforts to develop standardized, large-scale carbon capture facilities. Then moving on to renewable energy and development in the investment in Mainstream. Firstly, Mainstream is progressing well on its construction activities for the two solar PV plants of total 150 megawatt in South Africa. The first plant of 97.5 megawatt is on track to start commercial operations during second quarter this year. Also, the operational financial results from the 1 gigawatt Andes renewable platform in Chile have continued to improve from Q3 throughout Q4. Finally, we highlight the extensive work ongoing to realize further cost reductions in the business. The updated target is a 65% reduction in overhead and payroll costs compared to 2023 levels, which totals to above €70 million in annual savings. Looking at our activities in sustainable assets development, there has been material progress made in the project and in partnering efforts. We're actively developing one of the most mature green ammonia projects in Europe. And the project team reached an important milestone when signing a term sheet for supply of 150,000 tons of green ammonia to the German energy trading company, W&G. This term sheet represents close to 50% of the plant production volumes from the plant, and it's a strong signal of continued interest in green ammonia as an enabler for net zero transition to European industries. Furthermore, we've also signed a collaboration agreement with a major European utility company, targeting an ownership share in the project company from the DG2 milestone. In the last quarter, we've also advanced our developments of the data center business. The ready-to-build Kvandal site, which offers access to 230 megawatts of stable renewable energy in a very attractive energy pricing area, continues to generate good attention in the data center space. And we're now working with the data center industry to develop the best possible business solution for this opportunity. Finally, over to Supernode, a portfolio company that specializes in the development of next-generation superconducting cable systems for bulk electricity transfer. With the successful opening of Supernode's Cable Technology Center in Blythe, Mentioned last quarter, the company is now ready to test a full-scale prototype of their superconducting technology. This is expected to be completed during the second quarter of this year. Then, later in the year, Supernode is aiming to conduct a full-scale demonstration of a 30-meter superconducting cable at National Grid's D-side facility. This will be a major milestone, providing the technology into a real-world transmission environment. Then we'll move on to the more detailed update, starting off with our investment in Acker Carbon Capture. As mentioned, the ACC board has proposed an extraordinary dividend of NOC 3.5 billion, which translates into NOC 1.5 billion dividend to Acker Horizon. And we're really pleased to see a significant portion of ACC's cash position being distributed to shareholders following the sale of the 80% of the carbon capture business to SLB back in 2024. On the industrial side, SLB Kapturi, the 80-20 JV, reached significant milestones. In December, the mechanical completion of the world's first full-scale carbon capture facility at the cement plant was achieved at the Heidelberg Materials Breivik plant here in Norway. The carbon capture plant is planned to be operational in 2025 and is designed to capture 400,000 metric tons of CO2 annually. Furthermore, in January, SLB Kapturi completed commissioning and handed over its first modular carbon capture plant, a trench waste to energy facility in the Netherlands. Completion of the plant, which can capture 100,000 metric tons of CO2 per year, proves that the technology works in full scale and marks a significant milestone in enabling affordable decarbonization. Also in January, SLB Kapture, in cooperation with Aker Solutions, was awarded an EPCIC contract from Hafslund Celsius to deliver a carbon capture solution at the waste to energy facility at Klemmensru. This project is part of Longship, the Norwegian government's full value chain carbon capture and storage project. The contract award includes delivery of a carbon capture plant liquefaction system storage and loading facilities at the waste incineration site it also includes an intermediate co2 storage and ship loading systems at the oslo harbour and the co2 will be transported to the northern lights permanent storage facility on the norwegian continental shelf the carbon capture plant is expected to be operational in second half of 2029 and will capture 350,000 metric tons of CO2 annually. All in all, a number of strong achievements inside ACC. And with that, I hand it over to CFO Mainstream, Julie Berg, to take us through the mainstream business.

Thanks, Ash. In Chile, our Andes Renovables platform has seen further improvements in its commercial margin during the quarter. And construction on Currie, our wind farm in Chile, is progressing well and remains on track for CO2 in the second half of 2025. And in South Africa, we have two solar PV projects in construction. The first project continues to advance and remains on schedule for CO2 in Q2 this year. Additionally, construction is underway on the ELIQA project, which further strengthens our footprint in South Africa as we move to advance our pipeline in the region. In addition, we are targeting to deliver a cost-based reduction of approximately 65% by 2026 compared to 2023 levels. This further expands on the original target of 45 million euros, against which we delivered 34 million of savings in 2024 alone. Moving on to the next slide and our commercial performance, the Andes Renovables platform continued to deliver a positive commercial margin of €30 million, representing further improvements in Q4. This includes a €7 million increase related to Tariff Stabilization Law's third publication. This continued improved performance was driven by lower internodal price differences on a year-on-year basis, resulting from seasonally higher hydro generation and lower withdrawal prices, combined with PPA price increases from updated indexations. At Currie, positive construction progress continues at our 109 megawatt wind farm in the north of Chile, which was fully released for construction by the Chilean National Monuments Council in July last year. Contractors are mobilized across the main site, substation and overhead line, and the project remains on track for its COD target in the second half of 2025. Following the successful termination of the project's DISCO PPA in 2023, we see interesting PPA opportunities on Currie going forward. And on the regulation front, and as mentioned earlier, the Tariff Stabilisation Law's third publication has released reassessments corresponding to the period from March 24 to June 24. For Q4, Mainstream recognised €7 million in reassessment revenues related to this programme. The cash impact of this reassessment is expected to be approximately €12 million. Turning to construction, we're pleased to highlight key milestones across our solar and wind projects, reflecting steady advancements towards our CO2 targets in 2025 and 2026. Firstly, our 97.5 megawatt solar PV project, which is supported by a 20-year corporate PPA with SASOL and Air Liquide, is progressing well towards its COD target of Q2 2025. as you can see from the aerial picture on the right. While ILIQA, our 50 megawatt solar PV project that achieved financial close in October 24, has started construction with commercial operation targeted for early 2026. This project represents a significant milestone as Mainstream's first dedicated renewable energy supply agreement project, which is also one of the first of its kind to reach financial close in the South African market. and this in partnership with Investec Bank Limited. And as a reminder, these projects are tailored to private offtakers and target short to medium term offtake arrangements through an aggregation platform. And as discussed earlier, construction at Currie continues to progress well with COD still targeted for the second half of 2025. And then moving on to our development pipeline, we are advancing key projects across South Africa, Australia, and South Korea, demonstrating our ability to progress diverse opportunities globally. In South Africa, the 100 megawatt Vreda solar PV project, which is in late development stage, pre-construction, is targeting the private CNI market through renewable energy supply agreements, similar to Aliqua, with financial close expected in the second half of 2025. The project is fully permitted with land secured. Moving on to Australia, the Sunny Corner onshore wind project in partnership with Sameva Renewables is progressing well. The project has an investigative permit awarded with LIDAR deployed and work underway on the environmental impact statement. Next key activities include the installation of a met mast in Q2 2025. And then finally, in South Korea, the KF Wind project, a floating offshore wind project developed in partnership with Ocean Winds and Kumyang, is preparing for the upcoming government auction in 2025. The project has secured several significant milestones last year, including its environmental impact assessment and transmission service agreement. At Mainstream, we remain focused on our updated strategy centred on becoming a lean and focused independent power producer, leading in our core markets with an emphasis on building operating capacity through strong project execution and capital efficiency across our portfolio. In our core growth markets of South Africa, Australia and the Philippines, we are accelerating efforts to develop a high-quality pipeline of projects. Over the past few quarters, we have highlighted in detail the attractiveness of these markets and projects. Mainstream is well positioned in South Africa with a robust development pipeline, two projects in construction and several more scheduled to reach financial close in the foreseeable future. Our pipeline in Australia and the Philippines is focused primarily on the development of attractive onshore wind projects. This pipeline consists of 1.8 gigawatts of early stage projects, which have achieved a number of key milestones over the past few quarters. And in addition, we are continuing to deliver on our cost optimization targets with approximately 65% reduction targeted in our cost base by 2026 compared to 2023. For 2024, we have already achieved a 34 million euro reduction, reflecting our commitment to operational efficiency and focus on delivering growth and value in our core markets. And to conclude, Mainstream is sharpening its focus on core growth markets, South Africa, Australia and the Philippines, where we see the greatest potential for value creation. And this is demonstrated by the significant milestones achieved in 2024, including financial close on key projects, ongoing construction progress and our development of our high quality pipeline. And as we move forward in 2025, we remain committed to capital recycling opportunities and are actively exploring new partnerships to support future growth. So with a robust pipeline of projects, deep partnerships and a clear focus on operational excellence, we are well positioned to deliver on our mission of sustainable and innovative energy solutions globally. And with that, I will hand over to Christoffer.

Thank you, Julie. Starting with some highlights from Aqua Horizon's asset development, which develops industrial decarbonisation assets. There have been several positive developments for Narvik Green Ammonia, which we will talk about in more detail on the next slide. During the course of Q4, an agreement was reached with Norwegian Hydrogen for the sale of the Rukan asset. We see Norwegian Hydrogen as well positioned to mature this project to FID and onwards. As part of the agreement, AAD has retained an option to enter the project at FID for up to 20% of the equity. We also experience good interest in our ready-to-build Kvandal site with 230 MW of green baseload power available. The Balangsleda site zoning plan has been published for public hearing. and the expected power balance the next seven to eight years in Northern Norway has been improved over the last months. Volu has, as a consequence, taken down their price levels in their expectations for the period, reinforcing the attractiveness of our position in Northern Norway. Moving to Narvik, our large-scale green ammonia project in Northern Norway. As communicated last quarter, we were in late-stage discussions with a large European offtaker. And in December, we announced that Narvik Green Ammonia and V&G has signed a term sheet for the supply of green ammonia from Narvik to Germany. With an intention to purchase up to 150,000 tons of green ammonia per year, the term sheet marks an important step forward, signing firm offtake contracts, which enables FID. The term sheet also includes a 50,000 tons per year option, taking the total volume to over 50% of the total capacity. Furthermore, we have completed the pre-study update for the new and optimized concept, and the zoning plan was approved by the Narvik municipality and subsequently went on public hearing. And finally, we have signed a collaboration agreement with a major European utility targeting ownership at DG2, in addition to Statkraft. Strong consortiums of partners are key to enable large-scale green ammonia projects, and the specific interest in NGA is a testament to the attractiveness of our project. Powered LAN is a joint venture with Nordkraft to develop industrial sites in the NO4 power zone in Northern Norway. Our nine industrial sites are strategically located close to the 420 kV central grid and are at various stages of permitting for power-intensive industries, such as hydrogen-based industries and digital industries. The data center market is rapidly growing, driven by growth in AI and cloud computing. The Kvandal site, where there is 230 megawatt of electric infrastructure already built, is well positioned to attract customers with significant short-term need for power, both in the data center industry and other industries. We see an opportunity for very attractive project returns with short lead time to stable cash flows, as well as significant interest from a diversified set of capital sources. This marks the end of the update on asset development, and I will now move on to Aker Horizons financials. On the financials, the consolidated income statement for Aker Horizons shows a net loss of NOK 657 million for the fourth quarter, compared with a net loss of NOK 2.2 billion for the third quarter. ACC reported a net profit of NOK 21 million, of which Aker Horizons share is 9 million. The profit reflects ACC's share of loss of NOK 49 million from the SLB Kapturi JV, countered by NOK 106 million in financial items from interest income and fair value changes of financial instruments. For MRP, the commercial margin in Andes was positive 30 million euros in the quarter, equivalent to NOK 350 million, as mentioned by Julie. Revenue of NOK 592 million mainly relates to energy sales in Chile. Operating expenses consist of around NOK 300 million related to production costs in Chile, payroll of 150 million and overhead of around 90 million, with a balance related to other items. EBITDA for the quarter was negative 29 million. Cost reductions in mainstream are on track. 34 million euros in savings on payroll and overhead was realized in 24, equivalent to NOK 400 million. Another 40 million or around NOK 500 million in annual cost savings are expected to be achieved in 25 and 26 through further cost optimization. Depreciation is mainly related to Chilean production assets, and this quarter the NOK 99 million is somewhat countered by positive one-offs related to insurance settlements on the ALENA assets. Share of net loss in JVs is mainly related to offshore JVs with development activities. Net financials in mainstream were negative 478 million in the quarter, consisting of about 150 million related to the corporate financing facility put in place at the end of 23, 240 million in deferred interest on project finance and mezzanine debt in Chile, foreign exchange effects of around 90 million, and other smaller items. Tax of NOK 39 million is related to deferred tax liabilities related to certain fair value adjustments in the accounts. Net loss for the quarter was 689 million, where of Aqua Horizon's share is 404 million. Moving to AAD. AAD reported a net loss of NOK 31 million, reflecting maturing hydrogen projects and developing the land portfolio, in addition to commercial efforts related to powered land. The total loss in Q4 was 657 million, as mentioned, whereof Arca Horizon's share is NOK 381 million. Net capital employed reflects our initial investment in the portfolio company, adjusted for any profit loss since then, additional investments and FX revaluations. Over time, we expect to get a healthy return on our capital employed. As of Q4, we had NOK 2.4 billion employed in ACC, 2.5 billion in MRP, half a billion in AAD and 0.2 in Supernode and 0.4 in other assets. Total net capital employed of NOK 5.9 billion, where of 3.6 billion is funded by debt net of cash and NOK 2.3 billion in equity. During the quarter, the capital employed was increased by NOK 10 million from our share of ACC results, reduced by 286 million in MRP, 19 million in asset development, and increased by 14 million in Supernode. Other of positive NOK 121 million is driven by a combination of sponsor fee income from MRP funding and Acra Horizon's SG&A cost in addition to gain on FX hedges. In sum, the net capital employed was NOK 5.9 billion at the end of the quarter, as mentioned. This is an overview of Aker Horizons' external financing and commitments. There is an ongoing process to optimize the overall capital structure in Horizons, and the announced dividend from ACC, which will, if approved on the General Assembly, give Horizons around NOK 1.5 billion in added liquidity. We are well positioned to address the near-term commitments with the Green Bond in August and supporting MRP with a shareholder loan. The subordinated shareholder loan and convertible bond matures in January and February next year, respectively. Aker, our main shareholder, holds over 90% of this debt. We are experiencing good ongoing support from Aker and expect to have constructive dialogues regarding these debt maturities over the coming months and quarters. Cutting costs and right-sizing the cost base is key for us. The currently undrawn €500 million RCF is costly to keep and the company has decided not to exercise the option to extend it by one year. As part of the overall optimization of the capital structure, we are considering an amend and extend of this facility with a longer maturity and a lower amount. An RCF is useful in the event that value-creating opportunities arise. Going forward, the company will seek to maintain a robust capital structure through refinancing of existing debt, capital recycling in the portfolio, cost focus and strict capital prioritization. This brings us to available liquidity. The 500 million euro RCF was still undrawn at quarter end, as mentioned, and with a cash position of 2.9 billion and the RCF undrawn, that sums up to a total available liquidity of 8.8 billion at the end of the quarter. As previously mentioned, we are considering a smaller RCF going forward, which will result in a fit for purpose liquidity level also going forward. The net interest bearing debt position was up from 3.5 billion at Q3 to just above 3.6 billion at the end of the year, reflecting mainly operating costs, interest paid and investments in our green projects and companies. Thank you for your attention. This concludes today's presentation and we will take a short pause before we open up for questions.

answer the questions about the results presented today. My name is Mats Ektoet from Corporate Communications and I will read out the questions and direct them to either Lars Sparra, Julie Berg or Kristoffer Dahlberg accordingly. First question is regarding refinancing. The contemplated bond process earlier this year was put on hold. Now with the dividend, what are your plans for refinancing? Would you like to answer that, Kristoffer?

Yeah, thanks, Mats. So in early January, we met with a broad base of credit investors with regards to a potential new bond issue. During these meetings, we received valuable feedback, which we will take into consideration as part of the process going forward to optimize the company's overall capital structure. And as of Q4, as we have presented, we had a cash position of NOK 2.9 billion and with the announced dividend from acc which will which if approved on the general assembly give horizons around 1.5 billion of added liquidity so that means that we are well positioned to address the near-term commitments with the green bond and which matures in august and and also supporting mrp with a shareholder loan We'd also like to add that the subordinated shareholder loan and convertible bond matures in January and February next year respectively. And Aker, our main shareholder, holds over 90% of this debt. We experience good ongoing support from Aker and we expect to have constructive dialogue regarding these maturities over the coming months and quarters. So going forward, we will seek to maintain a robust capital structure through refinancing of existing debt. We'll do capital recycling in the portfolio. We'll continue to have strict cost focus and also capital prioritization.

Very good. Next question, I think we will direct that to Lars. What is Horizon's strategy for ACC going forward?

Well, first of all, obviously, we're happy with the dividend proposal from the board. And then from the Ark Horizon investment into ACC, I think we, first of all, we care that there's a robust process to follow up the 20% ownership stake in the JV and the business development happening in the JV. The JV has a strong pipeline of projects and the 20% stake and the value of that is certainly critical for us. The put value floor is 1 billion and there is material upside to that based upon how the JV performs up to 2027. And then secondly, in the agreements with SLB, there's further more earn-out mechanic, which is also depending upon the business development up to the year end, 2027. So I think for us, this is critical and there are significant values to protect by a robust plan around ACC.

Very good. I think we have a question for Mainstream here on Mainstream. Julie, when should we expect revenues from the South African projects?

Yeah, well, we have two solar PV projects in construction in South Africa. The first will reach COD in Q2 of this year. The second will reach COD in the first half of 2026, generating revenues as they become operational. And as we mentioned earlier, in addition to that, we have a further 100 megawatt solar PV project due to reach financial close by the end of 2025. So our strategy in South Africa is to accelerate the development and construction of our substantial pipeline, leveraging partnerships and new business models in order to create value and obviously generate revenue.

Yeah, and there's another question here I think we'll direct to you as well, Julie. Is mainstream in the process to divest its Chilean business?

So we don't typically respond to market speculation. However, we are continually reviewing our options for the Andes portfolio in Chile. At present, our focus remains on optimizing the performance of the operating projects, including consideration of storage opportunities, which is quite exciting. And on completion of the construction of the Curry project, also with COD targeted for the second half of 2025. So a lot of options available to us there.

Very good. And there is quite a bit of interest in data center industry here coming in. How far along are you in your discussions with data center players? I'll direct that question to you, Christopher. Do you expect to announce a transaction?

Yeah, thanks, Mats. So as communicated earlier, we are exploring opportunities for our sites in Northern Norway, including data centers where we see a significant growth in the demand. And I guess what's unique with our position in the north of Norway is that we have abundant green baseload power. We have the Kvandal site with 230 megawatts ready to build. at site, which we get feedback on is quite unique in a European setting. And moreover, the northern part of Norway has an attractive climate for data centers. So we experience significant interest, but we'll revert back to the market when we have some concrete news to share.

And also, with the incoming dividend from ACC, can you discuss a bit around how you prioritize to use this?

Yeah, sure. So like I mentioned, we had our cash position at the end of Q4 of 2.9 billion. And then if the dividend is approved, it will give us another one and a half billion in added liquidity. So that means that we are well positioned to address the near term commitments with the green bond in August and also supporting MRP. And of course, the increased liquidity gives us flexibility to support our portfolio of companies going forward and also to potentially look at new investments.

I think we have time for one more question, and I think it goes to you as well, Kristoffer. What is going to happen to the DNB facility in March when callable?

Yeah, thanks. So mainstream is exploring various sources of financing. That includes capital recycling, which the company has done since the inception and have been able to recycle 1.4 billion of capital in the portfolio since the inception. New debt instruments are being considered. They're working hard with partnerships. to alleviate some of the capital need in the portfolio. And of course, calling on the commitment from the shareholders is also one option. So it is callable in March, but the exact amount and timing is not yet certain and will depend on financing arrangements in mainstream. Very good.

And with that, we conclude today's presentation of the fourth quarter for Aqua Horizon. We thank you for your interest. We will follow up the questions that we did not have time for here. And if you have further questions, please see our website or reach out to us directly. Contact details in the press release. We now end this webcast.