Arise AB (publ)

Thank you very much. I will start with a brief introduction of the company. Slide three, thank you. Arise was founded in 2007, the first company in the sector in Sweden to be listed on Nasdaq in 2010. And we are nowadays some 76 employees in six different countries. We have three business segments, starting with the IPP part of production. Currently, we have 172 megawatts installed, corresponding to some 430 gigawatt hours per year annual production, budgeted production, I could say. We also have the development segment. Currently, we are at the 9,000 megawatts in our product pipeline. We have since inception divested some 1620 megawatts, adding some 125 to this during the quarter with the transaction of the best in Finland. And the third leg is our solution, what we call solutions, our services business, asset management, and also construction management. Currently, we have some 2,000 megawatts under asset management and we have under construction management some 380 megawatts. With that, I leave the word to Marcus.

Thank you, Per-Erik. Yeah, Q1 2025 was affected by FX to quite some extent. I will come back to that within short. Our reported net sales amounted to 85 million SEK for the quarter. EBITDA came in at 24 million SEK, EBIT at 2 million SEK. Profit after tax totaled negative 19 million SEK, but adjusting for a refinancing one-offs of minus 19 million SEK, profit after tax totaled zero or SEK 0.07 per share. Our operating cash flow was 26 million SEK and cash flow after investments amounted to minus 10 million SEK. On production generated 91 gigawatt hours, pretty much in line with the same period last year. The average income decreased to SEK 555 per megawatt hour. And during the quarter, the project portfolio increased by almost 150 megawatts. Illustrating some effects and one-offs effects on this slide, as we have our revenue from earnouts recognized in Euro. A weak Euro impacts the revenue within the development segment. In the first quarter, this corresponded to approximately minus 18 million SEK, hitting that sales EBITDA and trickling down to the profit before tax as well. The weak euro obviously had the opposite effect within our net financials, where we instead had a positive effect of 11 million SEK. In connection with the refinancing and redemption of the outstanding bonds in January, and as we communicated at that time, we took one of costs of approximately minus 19 million SEK in the quarter. So the total impact of these items amounted to an EBITDA effect of minus 18 million SEK and an effect on profit before tax of minus 26 million SEK, which is worth keeping in mind. So if we look briefly into our segments, development posted negative EBITDA of 5 million SEK during the quarter, primarily then explained by the FX effects I just discussed. Happily, we signed an agreement for the first finished project sale in March. The battery project that Per-Erik mentioned, the earnings effect will come in the second quarter. Overall continued maturation of projects across all markets. Within our own production, we posted an EBITDA of 35 million SEK, January and March, so a decent wind speed, but February was kind of horrible and burned the full quarter. I realized price decreased to 555 SEK megawatt hours, but still on a historically good level. During Q1 we also entered into our first hedge positions. We hedged roughly 9 gigawatt hours each for Q4 2025 at 61 euros per megawatt hour and Q1 2026 at 72 euros. Our solutions business posted zero MSEC in EBTA and that's due to the fact that the construction management agreement for Kölvallen has been fully invoiced. which imply the revenue drop by approximately 2 million SEK for the quarter. There will be no further revenue under the construction management agreement, but instead the operations management agreement will kick in at the commercial takeover, which we expect in the first half of the year. Looking into our portfolio a bit, as I mentioned, it increased by some 150 megawatts. In Finland, during the quarter, obviously focus on the sale of Pysseisperre, but also maturing other projects, not least other best projects. We saw good progress in the UK. We expect projects to enter into planning during the year, and we now also see opportunities for the first portfolio sale in the latter part of this year. Finna Berget still waiting for line concession. We expect to have that in place in late 2025 and also to initiate the transaction process in late 2025. We have now also initiated the development operation in the German market with a sole focus on best projects, where we have the aim to get projects ready to build already in 2026. So all in all, satisfactory development of the project portfolio. Thank you.

Looking at the power markets in general, I could say that we had quite soft power markets during the quarter. In the Nordics, very much influenced by a strong hydrological surplus entering into the year in the Nordics. If we start with the spot prices, you can see the graph to the upper left. We had a quite mixed and volatile spot price environment. Cold and dry February shifted into wet and very mild March. We still see low demand and very low prices in the north and healthier pricing in the south. Should also mention that we had a very turbulent balancing market during March. If you look on the graph, you can see the orange line, which is SE4 and the blue line, which is the system price. You can see prices peaking in February and then losing and weakening during March and peaking in SE4 around 90 euros per megawatt hour and losing down to some 50 euros currently. So quite a big drop during the quarter on spot prices. Looking on forward prices to the bottom left, calendar year 26. Here you can see in the bottom the blue line, the system price, the orange one, SE4 here as well. And the green line is the German forward prices. And you can see it's a quite big gap between them. Nordic prices very much impacted by a strong supply and continuing low demand, but a bit different story when it comes to the German prices, low demand as well in Germany, but also very much impacted by weakening fuel prices, gas prices as winter risk dissipate. Important to notice the gap between Nordics and Germany, even though markets are soft, there is a big gap. And if we have a hot and dry summer, it can make a big difference. Nordics coming closer to Germany, but that remains to be seen. With that, we change slide again. Our agenda for this year. We are very much focused to deliver on our financial targets. The shorter term one is to have sales of some 400 megawatts in total, 24 and 25. With the business pair transaction, we reached some 165 megawatts. So we are below 50% of the target, but we are still optimistic that we will be able to manage that target. In the more long-term target, we have a target of 10 gigawatts or 10,000 megawatts in the total product pipeline by end of 2025. We are currently, as Marcus shown, some 9,000 megawatts in the project portfolio. So we are quite close to that target, I would say. One other main target for us this year is to achieve commercial takeover of Sjölvallen, which we expect to do during first half or second quarter this year. And we are continuing our efforts to mature early stage projects into late stage to realize a long-term target of having some 500 megawatts product sales or FID per year the years 26 until 2028 and that is obviously ongoing as we're not there yet and with that we change light again a bit deep diving into the first product sale in Finland I think the We are really happy to be able to deliver on our strategy. One is, of course, to diversify in terms of technology. This is the second one we are doing on BESS, but also to diversify in terms of geographies, our first transaction in Finland. So we are very happy about that. A quite big size BESS product, some 125 megawatts, which was sold to Alpik. as we understand it's the largest best product sold in the nordic so far purchase price of 6.7 million euros to be paid on closing and we expect to have closing very soon this quarter uh following by children in the end of 24 i think we think that this is very further illustrates the results from our diversification efforts and some kind of evidence that this model works for us. I should also mention that the best projects are quite much different to developing wind and also solar. We can do it with a very low capital spend. Of course, it requires competence, but not much capital. And we actually As we did for Tysholen, we also had a quite quick process for Pussysperry around one year from start to sales. And looking at the IRR, it's quite impressive numbers. We are looking at here, we are talking about the four-digit IRR percentage. We are quite confident that we are able to do more transactions on BESS and we are well positioned to do further transactions already this year. Short-term outlook as we all experienced there are a lot of your political turbulence globally and as we see it this is another driver for what we do, distributed power production, security and supply, or you could say national security. As having distributed power production, it's less sensitive for attacks in a war situation. And as we see, this should increase the attractiveness, not just for our rights, but for the whole sector in reality. Looking a bit more on our eyes, we are aiming for at least two more transactions this year. The successful diversification has provided us with a number of transaction opportunities. We have not just one or two alternatives here, we have a number of alternatives in different regions, which makes life a bit easier for us. We have experienced quite and we are currently in quite soft power markets, but we should keep in mind that power markets are really sensitive, weather driven with high volatility. We have so far been quite successful in doing price hashes when there are opportunities in the market and we are still, we are active in monitoring the market on a daily base and we will if we see opportunities we will do some further price hedges short term and during the year as well and as said earlier we will see this year quite a big price gap to continental europe and if we see some some different weather conditions hot and dry we will see and most likely see a market change north again with that said i think we are through the presentation and the floor open for questions.

To ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Caleb Solomon from SEB. Please go ahead.

Hi guys, just a few questions from my side. In the report you said FX had a negative impact of roughly 18 million. Can you quantify how much of that was kind of due to negative effect on the electricity prices and the revenue recognized this specific quarter in development versus the kind of negative revaluation of development and construction projects you have on your balance sheet?

Hi, Callum. Thank you. The 18 mentioned in the report is kind of carved out only for the contract assets or for the revenue recognition. So that's the major FX effect in the quarter, which we wanted to illustrate. due to all the earners being recognized in revenue. So there is a revaluation also for the kind of historical revenues that has been recognized. So 18 is on the contract assets alone.

Okay, that's clear. Thank you. And last quarter you secured hedges for Q4 this year and Q1 next year. But since then, hydro balances have come up a lot. So can you say anything about how the kind of pricing of those baseload contracts has moved since then? And if you were able to secure any new ones during Q1?

Yeah, I would say that in, let's say, if you go back just a few weeks, we have been a bit sideways in short term prices. We are monitoring the market closely and if we will see, which we probably will see, some dry weather and hot weather during the summer, then it can change. I mean, it can change in two weeks time to be totally different. And we are basically waiting for those peaks to happen and then we are ready to strike. as simple as that. So we are focusing on short-term market as it is right now. Looking at our targets, I would say that the closest ones are in Q1, 26 as it is right now. 25 prices doesn't look super good in the short term. So we expect perhaps more and more during Q4, Q1, and perhaps to stay open during summer. We'll see. But that's where we are right now.

And just to follow up, should I interpret that as they have moved sideways since last quarter or they're slightly down from, I think it was 70 euros?

No, sorry, from last quarter it's down. I was in a much shorter perspective than you, Caleb. So from last quarter, it's definitely down. And as you can see in the previous slide that we had in SE4, we had prices in February around 90 euros per megawatt hour dropped down to 50. So it's quite a big drop there. But in my world, I was just in the closest weeks. But looking back at quarter, definitely lower, yes.

Okay that's clear thank you and in Q4 you also said that one million per megawatt should be considered a sort of a blended average for the projects you sell and I get that this differs depending on what technology and stage you sell the project at but considering that the last projects or the one you're expecting to close in Q2 was just below 0.6 million per megawatt does that imply that we should expect some of the projects this year to be more tilted towards technologies with higher selling prices, like ready to build wind? Or should we kind of expect the average price to be lower than one million per megawatt this year?

I would say that that is a quite rough, the one million is a quite rough blend of different technologies, different geographies and different timing as well. So it's really a rough number. I would say that if we do more best transactions this year in Finland, we will be in the same neighborhood as you can see for Pusispare. If we would do wind in some other geography, we expect the DP to be higher. So it's really a bit of a moving target there.

obviously we have a bit of markets so i would say that the dps this year will not be a record level okay that's clear um and has the recent kind of global turmoil at all impacted your clients willingness to invest in your projects in the sense that you're more hesitant and and are you as confident in your volume targets today as you were one quarter ago

yeah we haven't changed our mind when it comes to our what we aim for this year and what the expectations for this year obviously the political turmoil have impact on all markets and also especially on financial markets but as we see as we see what we do should really it really strengthen our business case i would say what's happening in the world as i said before that i mean security of supply with distributed power production is better in our situation. So I think all in all, it strengthen our business case, the turmoil we see.

Okay, and just one last kind of housekeeping question. I just noticed you said you're expecting to sell two projects this year. And I think that's the first time I've heard in a while you actually specify how many projects. So why is that? And can you expand on what projects that is? And you also mentioned you're expecting Finobarriere to initiate sales process late 2025. Do you also expect to close it 2025? And is that one of the projects you're referring to or? Is that more 2016?

I think I said not, I didn't say two, I said at least two. And we are actually, we have more opportunities. I think we also said that diversification has been a success for us. And we expect to do more in Finland. We expect to do something in the UK as well during the year. With that said, we don't exclude the possibility that we would do something in Sweden as well. So we are looking at a number of opportunities, alternatives in parallel right now. Coming back to Finnerberget, it's possible but unlikely that we will close that one this year.

Okay, that's all from me. Thank you. I'll get back in line.

Thank you.

The next question comes from Hannah Grimborg from Handelsbanken. Please go ahead.

Yeah, hi. Hannah here. So I have two questions. So the first one is when it comes to reaching your financial target of selling 400 megawatts, do you feel as confident in reaching this now as you did the last year, or do you think that the uncertainty has increased? So that's the first one. And the second question is just in the production division. How has the capture rate developed during the quarter and how do you think that that will develop now going forward?

OK, should I make an attempt, Marcus?

I can take the first one, the financial targets. I mean, yes, we are as confident and as confident you can be in the development business, right? So we are confident that we're having the number of balls to play so that we will be able to reach the financial targets. But on the other hand, it's a development business. There's always inherent risk in that. But in that sense, nothing has changed from the last quarters, not least since we signed the Pysseisberge in the quarter. Capture rates going forward, very difficult to say. I don't know if you have some flavor on that, Fredrik.

What we have seen so far is lower power prices has also been higher. capture rates and most likely that will continue. We had some improvements in capture rates, I would say, recently, but on the other hand, power prices have been lower as well. So it tends to be connected to each other. Like, for instance, we had super high capture rebate discounts during 2022. at super high prices but in the end of the day we had even though high capture discounts we had high revenues. I should also say back to the first question on the portfolio and expectations and that we have been expecting from first when we set the target that it would be a backloaded one so I think we are progressing as we had hoped.

All right. Great thing for them. Thank you. Thanks for that.

The next question comes from Matthias Ehrenborg from Red Eye. Please go ahead.

Yes, hello gentlemen, Mattias here from Redeye. I just wanted to start off by asking regarding the Finn-Norberget project. You touched upon it already in your presentation and earlier in the Q&A session here, but in the last report you mentioned that you aim to divest the project in 2025. It now says that you hope to initiate a sales process here in 2025. What has happened since the last quarter, I mean in terms of progression? Is it still a line concession that is a bit uncertain in terms of timing or

Yes, it's a waiting process, really. And of course, we had the hope that authorities could be quicker to handle this quite simple permitting processes, but it takes time, unfortunately. Of course, there are matters of resources, et cetera, and the authorities above them. Nothing really happened other than then we are just waiting and we have no news on that really so it's more about what we expect.

Okay and in terms of the capacity it's still uncertain what the final capacity is going to be and if it's going to be divided into two phases or what's the status there?

Yes, I will say that that is pretty clear now that it will be a step one and two in total 200 in two steps, starting with 100 megawatts. So that's information we have received from the TSO.

Okay, excellent. Regarding Kjell Wallen, what remaining effects in the P&L and the cash flow can investors expect?

Yeah. Pina, we expect to have the COD in Q2. So as of now, we're continuing for the time being, the revenue recognition at the same pace. But as we come closer to the COD, that might change. As you've seen with, for instance, Kaftosan and Twin Peaks, we also had some buffer in the end to cater for the final settlement and the final agreement on the earn-out payment. So that's on the P&L side. And then obviously we expect the COD payment to be paid shortly after.

Okay, perfect. Thank you. Just a final question regarding the development segment. How would you describe the current state of the transaction market and are there any trends worth highlighting in terms of customer risk appetite or pricing and lead times and so on?

Yeah, it's difficult to say really. Obviously, the geopolitical turmoil and also financial turmoil in financial markets has some impact. And of course, you might see some more risk in the markets. But I think to us, we don't see any clear signals that there is less appetite. For instance, we have seen a few transactions now in Finland quite recently. So we see there is capital still in the market to deploy. So we don't see an immediate difference, I would say. Obviously, we had quite soft power markets in the Nordics for a short time now. Will that continue? It might have some impact, but this is We are used to this as well, being in the Nordic market, that things happen fast, up and down. So we are not that stressed, actually. I think we are quite confident that we will be able to do what we're aiming for this year.

Okay, thanks. If we move over to the production segment. the end of this quarter I had a look at the total wind production in SA3 and SA4 and each region was down 20 percent quarter on quarter and despite this your production only declined six percent. Are you able to provide any color to these numbers because from my point of view this difference seems bigger than before which is in your favor in this situation?

That's a tricky one. You mean that we have been hit less than competitors, is that what you say?

Yeah, exactly. I had a look at the total production for the market in general in SC3 and SC4.

Yeah, I mean it could vary between different wind locations obviously and there are also It could be also that there have been issues with availability, etc. Obviously, we are not super happy with the production we had last quarter, but it could be so that competitors have a worse situation. But I haven't seen that comparison, actually.

Okay. Another question regarding the OPEX per megawatt in the production segment. It amounted to 176 per megawatt relative to 110 in Q1-24. Could you just provide some color on the reason for this increase?

Yeah, this quarter I would say that mostly explained by the lower production since we have labor included in this quarter which we did not have in 2024. So I think, you know, ballpark, if we would have, if we would have produced according to budget, you could, you would have like between 40 and 50, maybe say for megawatt hours, lower OPEX per megawatt hour. So it's mostly production driven.

Okay. Okay. That makes sense. The final question from my side, regarding the capex in the quarter amounted to 36 million. What's included in this figure this quarter? Is it related to a grid concession or what does it look like?

No, it's not related to any grid investment. It is related to to the grid in Elnät towards Fasikan. And the kind of short summary is that what we do is that we build and we own the grid and then we sell the right to use to Fasikan. So that gives rise to an accrued income which Fasikan paid for and an asset in Elnät. So that's the top up, so to speak, in the capex you see in the cash flow statement. That was roughly 13 million SEK in the quarter. But important to understand is that all this is net cash zero, net EBITDA zero, but we get an asset. within the RICL net. So we own the asset, and that's why it pops up in the investment line item in the cash flow.

Okay. Okay. Makes sense. Thank you. Thank you for that. That was all for me. Thank you for taking my questions.

Thanks, Mattias.

Thank you, Mattias.

There are no more questions at this time, so I hand the conference back to the speakers for written questions and closing comments.

Okay, I will do some closing comments then. First quarter finalized. We are happy to conclude that our strategy start to show results. Extremely happy to see the great performance we have in the Finnish organization, I should say as well. We expect to continue realizing value from our project portfolio during the year to do more sales transactions as already mentioned. On top of that, we have lower financing costs due to successful refinancing of the company. And we also see some potential upside in our own production during the year. So all in all, we are quite optimistic and expect that 2025 will be another good year for Rice. So thank you very much for attending and listening. Have a good day.